Bangladesh’s state-run Petrobangla has started using private commercial banks to open letters of credit (LCs) for liquefied natural gas (LNG) imports, officials said.
The move has helped cut LNG import arrears by nearly 25% to around $340 million from $455 million within weeks. Petrobangla expects further reductions as more private banks show interest.
Insiders confirmed that agreements have been signed with Prime Bank, City Bank, and Brac Bank to open LCs. City Bank will provide up to $100 million in credit, Brac Bank $90 million, and Prime Bank $50 million.
The initiative follows the success of Bangladesh Petroleum Corporation (BPC), which cleared $350 million in dues within months through private banks. Unlike state-run banks offering flexible terms, private lenders require full LC payments on the due date, officials noted.
Petrobangla’s sales agreements mandate payment within 15 days of LNG delivery, with Omani supplier OQ allowing a 25-day window. Delays incur additional interest at the Secured Overnight Financing Rate (SOFR) plus 4–5%.
To address mounting dues, the Energy and Mineral Resources Division has requested around $1 billion from the Finance Ministry by June.
The previous administration also faced payment challenges amid rising import costs and foreign exchange pressures.
