World Bank Approves $640 Million to Enhance Gas Supply Infrastructure and Improve Air Quality in Bangladesh

Strategic Insights -

The World Bank's Board of Executive Directors has approved two projects totaling $640 million to support Bangladesh in enhancing its gas supply infrastructure and improving air quality. The Energy Sector Security Enhancement Project ($350 million) aims to improve gas supply security by facilitating access to cost-effective financing for Petrobangla, a state-owned company. The project will utilize an IDA guarantee to mobilize up to $2.1 billion in private capital over seven years for new Liquefied Natural Gas (LNG) imports. The Bangladesh Clean Air Project ($290 million) will take a comprehensive approach to tackle air pollution, focusing on air quality management and strengthening the Department of Environment's air quality monitoring network.

Key Takeaways:

  • The Energy Sector Security Enhancement Project will help improve gas supply security by facilitating access to cost-effective financing for Petrobangla, with an IDA guarantee mobilizing up to $2.1 billion in private capital over seven years.
  • The project will provide payment security and working capital solutions to facilitate LNG imports under long-term contract, reducing dependency on expensive spot market gas imports.
  • Imported LNG accounts for over one-fourth of total gas consumption in Bangladesh, with 42 percent of gas consumed in the power sector, which disrupts electricity generation and hurts the economy.
  • The Bangladesh Clean Air Project will help operationalize the Continuous Emissions Monitoring Program for real-time monitoring of major industrial sources of air pollution, and introduce a fleet of 400 zero-emission electric bus services.
  • The project aims to improve vehicle emissions control and establish depots for charging, parking, and maintaining the electric buses.
  • The project will construct five new Vehicle Inspection Centres, upgrade two non-functioning ones, and deploy mobile Vehicle Inspection Centres and 20 mobile vehicle emissions testing units.

Statistics:

  • The estimated health costs of air pollution are equivalent to 8.3 percent of Bangladesh's gross domestic product (GDP) in 2019.
  • Air pollution caused over 159,000 premature deaths and 2.5 billion days of illness in Bangladesh in 2019.
  • Combined, the interventions in the transport sector are expected to reduce primary PM2.5 emissions by approximately 2,734 metric tonnes per year.
  • Imported LNG accounts for over one-fourth of total gas consumption in Bangladesh.
  • 42 percent of gas is consumed in the power sector, which disrupts electricity generation and hurts the economy.

Sources:

  • World Bank press release
  • The World Bank's Board of Executive Directors' approval of the projects
  • Gayle Martin, Interim Country Director for Bangladesh, World Bank
  • Olayinka Bisiriyu Edebiri, Senior Energy Specialist, World Bank
  • Ana Luisa Gomes Lima, Lead Environment Specialist and Task Team Leader of the Bangladesh Clean Air Project, World Bank