Dhaka: A recently signed agreement on a Saudi financing loan for the Bangladesh Petroleum Corp. was expected to boost the South Asian economy’s energy security and reduce pressure on its dollar reserves.
The International Islamic Trade Finance Corp., a division of the Islamic Development Bank, finalized on March 25 a financing deal with the Bangladeshi government to provide $1.4 billion to the Bangladesh Petroleum Corp.
The financing was aimed at developing Bangladesh’s energy infrastructure and “will ensure energy security for one of the fastest-growing economies in South Asia,” the ITFC said, as quoted by the Saudi Press Agency.
“Under this agreement, Bangladesh will get financing support from next July to June (2025),” Bangladesh Petroleum Corp. operations director, Kazi Muhammad Mozammel Huq, told Arab News.
“We’ll mostly import crude oil with the financing of ITFC. In addition, a little portion of refined oil will be imported.”
The loan will help the state-owned entity, responsible for importing and marketing fuel oil, to meet its obligations to suppliers. The two main ones are Saudi Aramco and the UAE’s Adnoc.
“The suppliers will receive payment on time,” Huq said, adding that since the financing was in US dollars, it would help reduce the pressure on Bangladesh’s foreign exchange reserves.
Bangladesh imports most of its oil needs. With the country facing a dollar crunch, the financing will help the government ensure uninterrupted supplies.
“This financing agreement will definitely be a big help for our import of the oil and gas,” Ijaz Hossain, an energy expert and professor at the Bangladesh University of Engineering and Technology, said.
“The energy supply issue is very critical. So, if the government receives a separate fund for purchasing energy, definitely it’s a matter of big relief, especially as we can’t buy oil and gas randomly as the market fluctuates regularly.”
Energy supply has been one of the major challenges for doing business in Bangladesh.
A survey from the Dhaka-based Center for Policy Dialogue showed earlier this year that more than 66 percent of businesses considered energy supply shortages as their main concern, a situation that often led to the suspension of production.
“Considering the current state of our economy, this fund will offer us great support,” Hossain added.
He noted that in the near future Bangladesh could also expand its cooperation with Saudi Arabia in the renewable energy sector.
“There are opportunities for us to strengthen collaboration with Saudi energy giants like ACWA Power and others for producing renewable energy. The government may help here with the support of necessary land acquisition. Because this sort of project will bring here direct foreign investments. These projects should move at a faster pace.”
