Bangladesh has secured $1 billion in financing for a $2.5 billion modernisation and expansion of the Eastern Refinery, a five-year project that will triple additional refining capacity and reduce the country’s reliance on imported petroleum products.
The Government of Bangladesh and the Islamic Development Bank (IsDB) have signed the financing agreement for the project, which will add three million metric tonnes of annual refining capacity.
Once completed, Eastern Refinery’s total capacity is expected to reach 4.5 million metric tonnes per annum.
The overall $2.5 billion investment comprises approximately $1 billion of IsDB financing and around $1.5 billion in contributions from the Government of Bangladesh, including taxes, customs duties and VAT.
Five-year refinery expansion programme
The project is expected to take five years to complete and represents a significant expansion of Bangladesh’s domestic fuel processing infrastructure.
The upgraded refinery will be capable of processing a broader range of crude oils and producing 15 types of refined petroleum products.
Increasing domestic processing capacity is intended to reduce Bangladesh’s requirement for imported finished petroleum products. Refining imported crude oil domestically is expected to generate annual foreign exchange savings of approximately $394 million.
The expansion is also expected to support a 5% reduction in the cost of major petroleum products.
Alongside the capacity increase, the project will upgrade fuel production from the existing Euro 2 grade to Euro 5 standards.
$1bn financing agreement signed
The financing agreement was signed by Dr Mohammad Mizanur Rahman, Additional Secretary at the Economic Relations Division of Bangladesh’s Ministry of Finance, and Anasse Aissami, Director General, Country Operations at IsDB.
IsDB’s Board of Executive Directors approved the financing at its 367th meeting on 16 June 2026 during the IsDB Group Annual Meetings in Baku, Azerbaijan.
Dr Muhammad Al Jasser, Chairman of the IsDB Group, said: “By expanding domestic refining capacity, the Eastern Refinery project will strengthen energy security, reduce dependence on imported refined petroleum products, and support cleaner fuel standards.”
He added that the investment was expected to strengthen economic resilience and provide benefits to businesses and households across Bangladesh.
The project will now move forward as a five-year infrastructure programme combining a major increase in processing capacity with refinery modernisation and improved fuel standards.
