The Bangladesh government on Thursday signed a US$1 billion loan agreement with the Islamic Development Bank (IsDB) to finance the Modernization and Expansion of the Eastern Refinery Project.
The agreement was signed at the Cabinet Division of the Bangladesh Secretariat in the presence of Prime Minister Tarique Rahman and IsDB Group President Dr Muhammad Al Jasser, according to the Prime Minister’s Deputy Press Secretary Hasan Shiplu.
The financing will support the construction of the second unit of Eastern Refinery Limited (ERL) in Chattogram, the country’s only state-owned crude oil refinery. The project is expected to help reduce Bangladesh’s dependence on imported refined petroleum products and strengthen its long-term energy security.
The long-delayed expansion has been under consideration for more than a decade. Once completed, the second unit is expected to substantially increase the country’s domestic refining capacity and reduce foreign currency expenditure on imported refined fuels.
The signing ceremony took place during Dr Al Jasser’s visit to Bangladesh from September 2 to 4. He arrived in Dhaka on Wednesday leading a high-level delegation to participate in official development programs.
The IsDB Board of Executive Directors approved the $1 billion financing for the Eastern Refinery modernization and expansion project at its 367th meeting in Baku, Azerbaijan, in June.
Established in Chattogram in 1968, Eastern Refinery has been a key component of Bangladesh’s petroleum supply infrastructure. Plans for a second refining unit were first prepared in 2010, but the project faced repeated delays over financing and implementation.
The expansion is now being pursued as a priority project to increase domestic refining capacity, reduce reliance on imported finished petroleum products and improve Bangladesh’s overall energy security.
