On March 25, 2024, the International Islamic Trade Finance Corporation (ITFC) of Saudi Arabia, a division of the Islamic Development Bank, finalized a financing agreement worth $1.4 billion with the Government of Bangladesh. Representatives from ITFC and Bangladesh Petroleum Corporation (BPC), the state-owned entity responsible for importing and marketing fuel oil, attended the signing event. This financing arrangement will facilitate BPC’s oil product imports from July 2023 to June 2024, as per the Saudi Press Agency (SPA). ITFC stated that the plan aims to support BPC in procuring petroleum products and contribute to the development of Bangladesh’s energy infrastructure. Furthermore, SPA reported that the funds will be allocated to various sectors associated with enhancing Bangladesh’s energy sector. The signing ceremony coincided with an official visit by a prominent delegation from Bangladesh to the ITFC headquarters.
The state-owned oil corporation has outlined its import projections for various petroleum products in 2024. These include approximately 4.29 million metric tons (mt) of 0.005% sulfur gasoil, 630,000 mt of jet A-1 fuel, 350,000 mt of 95 RON gasoline, 1.15 million mt of high sulfur fuel oil (HSFO) with 3.5% sulfur, and 90,000 mt of 0.5% sulfur marine fuel. As per a BPC official, nearly half of these refined oils will be procured through international tenders, while the rest will be acquired through government negotiations with state-run oil suppliers globally. Additionally, Bangladesh’s private sector is anticipated to import approximately 3.0 million mt of 180 CST high sulfur fuel oil containing 3.5% sulfur. In 2024, BPC is expected to import around 1.5 million mt of crude oil, marking a 7.14% increase from 2023. The official attributed this rise to the operation of a newly established single-point mooring facility, which can store a substantial quantity of crude before processing at the Eastern Refinery in Chattogram, the country’s sole refinery. BPC primarily sources crude from Saudi Aramco and ADNOC.
In the midst of a worldwide energy crunch, marked by efforts to cope with fluctuating oil prices and hindered by supply chain disruptions, such an agreement will assist BPC in importing oil products, ensuring a steady energy provision. Moreover, it will play a role in developing infrastructure, improving energy availability, and stimulating economic expansion in Bangladesh. This represents the ongoing progression of a broader preceding endeavor.
Earlier, on March 5, 2024, Foreign Minister Hasan Mahmud held discussions with Saudi Foreign Minister Faisal bin Farhan Al Saud at the OIC Secretariat in Jeddah, as per a press statement. During the meeting, Foreign Minister Hasan Mahmud raised various matters of shared concern, particularly expressing interest in collaborating on the procurement of crude oil. In response, the Saudi counterpart assured to explore possibilities for cooperation, including potential investments in refinery and petrochemical sectors.
On August 30, 2023, a Saudi firm entered into a partnership to establish Bangladesh’s largest solar power plant. The project, spearheaded by a joint venture led by Saudi-based ACWA Power Company, will be located in Rampal upazila of Bagerhat and is expected to generate 300MW of electricity with an investment of $430 million. The Bangladesh Power Development Board (BPDB) will allocate the necessary land adjacent to the existing Rampal coal-fired power plant for the solar project. This solar plant will cover an area of 900 acres. Additionally, the BPDB has earmarked land for a potential future coal-based power plant near the Rampal site.
ACWA Power, recognized as one of the world’s largest electricity companies, currently operates with a capacity of approximately 56,000MW. The company had previously signed a memorandum of understanding with the BPDB in November 2022 to establish a 1,000MW solar power plant in Bangladesh. Furthermore, ACWA Power expressed interest in investing $2.5 billion to construct a gas-powered plant capable of generating 3,600MW of electricity. This investment plan includes the development of a natural gas or R-LNG-based combined cycle power plant, as outlined in a memorandum of understanding signed with the BPDB on October 17, 2019.
Later on, Bangladesh and Saudi Arabia reached an agreement to establish a joint task force aimed at bolstering energy cooperation between the two nations. The decision reflects their mutual commitment to strengthening bilateral ties across various sectors of shared interest, in alignment with the directives of their respective leaderships and the aspirations of their people. These developments emerged during the 14th Joint Commission meeting held over two days on October 30-31, 2022, at the Crown Plaza Hotel in Riyadh.
In response to Bangladesh’s requests, Saudi Arabia has pledged to invest urgently in the commercial supply of liquefied natural gas (LNG) and in the Eastern Refinery Unit 2 project. Additionally, discussions during the meeting revolved around Saudi Akwa Power’s proposal to establish a 1,000MW solar power plant and another 730MW gas-fired power plant, underscoring the commitment to advancing renewable energy infrastructure and diversifying the energy mix.
Bangladesh has made arrangements to import 1.5 million tons of crude oil from Saudi Arabia and the United Arab Emirates (UAE) for the year 2024. The Cabinet Committee on Economic Affairs (CCEA), chaired by Finance Minister AHM Mostafa Kamal, provisionally approved a proposal to this effect during a virtual meeting held in October 2023. The proposal, put forth by the state-owned Bangladesh Petroleum Corporation (BPC) under the Energy and Mineral Resources Division of the Ministry of Power, Energy, and Mineral Resources, outlines the importation of crude oil through the direct purchase method (DPM). This method involves the selection of suppliers without the need for a tender or competitive bidding process. Saudi Aramco and the UAE-based Adnoc are identified as the suppliers for the total crude petroleum required. Bangladesh’s annual petroleum oil import requirement stands at approximately 6.5 million tons.
Bangladesh’s recent agreement with the International Islamic Trade Finance Corporation (ITFC) of Saudi Arabia, worth $1.4 billion, will significantly benefit the country by facilitating oil product imports and supporting the development of its energy infrastructure. Additionally, Bangladesh’s plans to import 1.5 million tons of crude oil from Saudi Arabia and the UAE in 2024, as well as its collaborations with Saudi firms to establish solar and gas-fired power plants, underscore the nation’s commitment to diversifying its energy sources and enhancing energy security. These initiatives align with Bangladesh’s broader goal of achieving sustainable development and economic growth.