The International Islamic Trade Finance Corporation (ITFC) based in Saudi Arabia, part of the Islamic Development Bank group, has recently concluded a significant financing deal with the Government of Bangladesh. The $1.4 billion agreement, signed on March 25, 2024, is set to bolster Bangladesh Petroleum Corporation’s (BPC) oil product imports for the fiscal year spanning July 2023 to June 2024, as announced by the Saudi Press Agency.
At the signing event, which was held during a high-level visit by a Bangladeshi delegation to the ITFC’s headquarters, both ITFC and BPC representatives were present to cement the arrangement. This financial support from ITFC is designed to ensure the steady procurement of petroleum products and to aid in the enhancement of Bangladesh’s energy sector infrastructure.
The BPC has laid out its import plans for 2024, projecting considerable imports of various petroleum commodities, including 4.29 million metric tons of low sulfur gasoil, jet fuel, gasoline, and different grades of fuel oil. The state-owned enterprise intends to secure these supplies through a combination of international tenders and bilateral agreements with oil-producing nations. An increase in crude oil imports is also anticipated, partly due to new infrastructure such as a single-point mooring facility, which is expected to boost the country’s crude processing capabilities at its sole refinery in Chattogram. The primary sources for crude are expected to be Saudi Aramco and ADNOC.
This financial arrangement comes at a critical time when the global energy sector is navigating a period of volatility, with fluctuating oil prices and supply chain challenges. The deal is poised to help stabilize Bangladesh’s energy supply and facilitate the nation’s infrastructural and economic development.
Earlier discussions between the foreign ministers of Bangladesh and Saudi Arabia had focused on potential collaboration in the oil sector, including investments in refining and petrochemicals. These talks underscore the two countries’ ongoing commitment to strengthen their economic partnership.
Moreover, a Saudi-led consortium has initiated a project to develop Bangladesh’s largest solar power facility in Rampal upazila of Bagerhat. With an investment of $430 million, this 300MW solar plant is a major step towards diversifying the country’s energy mix. ACWA Power, a leading global electricity firm, is at the forefront of this initiative and has also shown interest in investing in a large-scale gas-powered plant in Bangladesh.
A joint task force has been established to further consolidate energy cooperation between Bangladesh and Saudi Arabia, as agreed upon during the 14th Joint Commission meeting in Riyadh. This initiative reflects the two nations’ intent to enhance collaboration across the energy domain, including LNG supply and refinery projects.
Additionally, Bangladesh is set to import 1.5 million tons of crude oil from Saudi Arabia and the UAE in 2024, as per the Cabinet Committee on Economic Affairs. This direct purchase method sidesteps traditional tender processes, streamlining the procurement from identified suppliers.
In conclusion, the recent financial backing from the ITFC, alongside Bangladesh’s strategic oil import plans and energy partnerships, signifies a considerable boost to the country’s endeavors to strengthen its energy infrastructure and diversify its energy sources. These steps are crucial in advancing Bangladesh’s sustainable development and economic growth objectives.