Govt seeks $2.8bn ITFC loan for fuel, LNG and fertiliser imports

The government plans to secure $2.8 billion in financing from the International Islamic Trade Finance Corporation (ITFC) to support imports of fuel oil, liquefied natural gas (LNG) and fertiliser in fiscal year 2026-27.

Ahead of negotiations, Bangladesh Petroleum Corporation (BPC) has urged ITFC to lower its financing markup and allow letters of credit (LCs) to be opened through any local bank. The state-owned corporation also proposed greater flexibility to import fuel from any energy-producing country, rather than limiting purchases to specific markets, to strengthen energy security and respond to emergencies.

According to Economic Relations Division (ERD) officials, the financing proposal will be discussed during the Annual Financing Plan Meeting for FY2026-27, scheduled for 21-24 June in Jeddah, Saudi Arabia. The final financing amount is expected to be determined during the meeting.

The Bangladesh delegation will be led by ERD Secretary Shahriar Kader Siddiky, Energy and Mineral Resources Division Secretary Mohammad Saiful Islam, and Agriculture Secretary Dr Rafiqul I Mohamed.

Proposed financing plan

An ERD preparatory meeting on 4 June proposed financing of:

• $2.01 billion for fuel oil imports by BPC
• $600 million for LNG imports by Petrobangla
• $200 million for fertiliser imports by the Bangladesh Agricultural Development Corporation (BADC)

BPC told the meeting that its fuel import financing requirement in the current fiscal year stood at $1.65 billion, of which $700 million has already been disbursed. Citing higher global oil prices, the corporation requested a larger financing ceiling for FY2026-27.

Officials also agreed to compare fuel imported through ITFC financing with fuel purchased from the spot market to strengthen Bangladesh's negotiating position.

LNG financing demand rises

Petrobangla officials said the company relied less on borrowing in FY2025-26 due to stable economic conditions, continued remittance inflows and adjustments to domestic gas prices.

However, tensions involving Iran have disrupted LNG shipments through the Strait of Hormuz, a key global energy route, increasing uncertainty in energy markets.

Petrobangla plans to utilise the full $600 million financing facility available under existing agreements.

According to its FY2026-27 import plan, major long-term suppliers, including QatarEnergy, OQ Trading Limited and Excelerate Gas Marketing Limited Partnership, have declared force majeure until June 2026. This has increased Bangladesh's dependence on alternative suppliers and spot-market purchases.

The company expects to use financing for at least two LNG cargo purchases in June 2026 and utilise the remaining balances under existing financing agreements.

BADC seeks greater flexibility

ERD sources said ITFC had proposed a $500 million financing package for BADC in FY2025-26, including $200 million in confirmed financing and $300 million in contingency support.

A $100 million fertiliser import agreement was signed in September 2025, but the funds have not been disbursed after ITFC temporarily suspended financing due to the Middle East crisis.

BADC said Bangladesh had already secured commitments for up to $500 million in food-security-related financing support from ITFC. However, the initial $100 million facility was restricted to fertiliser imports from Saudi Arabia and remains unavailable because of regional instability.

ITFC has also sought additional documents to process a separate $200 million financing facility.

BADC has requested quick release of the remaining financing and proposed that future agreements allow fertiliser imports from any country, particularly member states of the Islamic Development Bank (IsDB).

Officials at the preparatory meeting agreed to raise these issues during negotiations in Jeddah.

ITFC's contribution to Bangladesh

ITFC, an autonomous member of the Islamic Development Bank Group, is headquartered in Jeddah.

The IsDB has supported Bangladesh since 1977. Financing for BPC's fuel imports began in 1997 and has continued through ITFC since 2008.

Between 2008 and FY2025-26, ITFC provided about $21.77 billion to help finance Bangladesh's energy imports.

BPC imports Murban crude oil from ADNOC and Arabian Light crude from Saudi Aramco. Janata Bank currently opens LCs for Murban crude imports, while ITFC finances payment settlements. ITFC also directly finances Arabian Light crude imports after Agrani Bank stopped opening LCs due to dollar shortages.

For LNG imports, ITFC approved a $100 million facility in 2024 and a $300 million facility in 2025, both extended until 2027 at a financing cost of SOFR plus 1.75%. Although Petrobangla has access to a total LNG financing ceiling of $600 million, the facility has not yet been fully used.

ITFC also provided BADC with $100 million in FY2025-26 for fertiliser imports at six-month USD SOFR plus 1.75%, alongside a 0.20% administrative fee.

Request for higher financing ceiling

ERD officials said an ITFC delegation visiting Bangladesh in May 2026 expressed interest in continuing support for the country's growing energy needs and expanding financing into agriculture.

The ERD has formally requested that ITFC raise its financing ceiling to $3.5 billion for FY2026-27, arguing that food and agricultural security are now as important as energy security.

The proposal reflects rising global commodity prices, increasing import demand and the need to protect Bangladesh's supply chains.

ITFC acknowledged the request and said any increase would depend on Bangladesh's formal financing proposals and requirements.

An inter-ministerial meeting is expected to finalise Bangladesh's position before negotiations begin in Jeddah.