The Moheshkhali LNG import terminal will allow Bangladesh to access natural gas from global markets. © Excelerate Energy
A decade ago, less than half of Bangladesh’s citizens had access to electricity; today, 78 percent can use electricity at work, at home, and throughout the country. Not only does this help the Government of Bangladesh reach its goal of providing power to all its citizens by 2021, but it offers citizens the opportunity to participate in a robust economy that grew by 7.1 percent in 2016, the fastest expansion in 30 years.
Even so, power outages are still common. That’s because poor operational practices and inadequate maintenance limit the supply of energy—as does a shortage of natural gas, which accounts for about 70 percent of Bangladesh’s power.
But that’s about to change. To restore depleting gas supplies, IFC has partnered with US-based Excelerate Energy to co-develop and then secure debt financing for the Moheshkhali Floating Liquefied Natural Gas (LNG) project—Bangladesh’s first LNG import terminal. Located offshore near Moheshkhali island in the Bay of Bengal, the floating terminal will provide crucial infrastructure required to access natural gas from global markets.
With 500 million standard cubic feet of gas per day of regasification capacity, Moheshkhali LNG terminal will provide clean energy sufficient to produce 3,000 megawatts of power—increasing natural gas supply in the country by 20 percent.
As lead arranger for the project, IFC helped arrange the debt financing package of $125.7 million for the project, including IFC’s loan of $32.8 million from its own account and the balance from the UK’s CDC Group; DEG, Germany’s Development Bank; FMO, the Dutch Development Bank; and Japan International Cooperation Agency (JICA).
This partnership has been years in the making. Toward the end of 2013, the Government of Bangladesh requested IFC’s assistance to develop LNG import infrastructure. In response, IFC used IFC InfraVentures, its early stage infrastructure project development window, to partner with Excelerate and co-develop the project.
Prior to Excelerate’s engagement with IFC, the company had been selected as the preferred bidder in a competitive selection process run by the Government of Bangladesh. IFC played a critical role in reviving a substantive dialogue between the authorities and the company to find a mutually acceptable set of terms that are bankable as well as consistent with other similar LNG projects globally.
IFC is committed to paving the way for Bangladesh to achieve energy security. Our partnership with Excelerate demonstrates how we can create a market and help an International Development Association member country overcome one of its biggest development obstacles. In Bangladesh’s case, this new market is especially important in light of the nation’s declining domestic natural gas reserves, limited hydro and wind resources, scarce land availability for large-scale solar deployment, and increasing dependence on expensive, imported liquid fuels.
During the last five years, IFC has financed and mobilized over $1 billion for infrastructure projects in Bangladesh. Throughout South Asia, we work to promote inclusive growth, help address climate change impacts, and encourage global and regional integration. We offer long-term financing and industry-leading sector expertise, focusing on supporting private infrastructure projects with strong development impact whose business models can be replicated elsewhere.
To learn more about IFC’s work in natural gas, visit www.ifc.org/ogmc.
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Published in July 2017