Eastern Refinery Modernised: Bangladesh to Treble Capacity to 45 Lakh Tonnes

🛢 Dhaka, Bangladesh — The Jeddah-based Islamic Development Bank (IsDB) will provide over $1 billion in financing for the modernisation of Bangladesh’s Eastern Refinery, in a move that will treble the country’s refining capacity and significantly reduce dependence on imported refined petroleum products.

🤝 A financing agreement titled “Modernisation and Expansion of Eastern Refinery in Bangladesh” was signed between the Government of Bangladesh and the IsDB on Thursday, 3 September 2026. Dr Md Mizanur Rahman, Additional Secretary of the Economic Relations Division (ERD), signed on behalf of Bangladesh, while Anasse Aissami, Director General of Country Programs, signed for the IsDB.

🏛 Prime Minister Tarique Rahman and IsDB Group Chairman Dr Muhammad Al Jasser were present at the signing ceremony — underlining the strategic importance of the project at the highest levels of both sides.

📊 Capacity Tripled, Foreign Exchange Saved

🛢 The ERD stated that the project will be implemented by Bangladesh Petroleum Corporation (BPC) under the Energy and Mineral Resources Division. Upon implementation, the refining capacity of Eastern Refinery — the country’s primary oil refinery — will treble from the current 15 lakh tonnes to 45 lakh tonnes per annum.

✅ The government expects the project to:

• ⛽ Enhance fuel supply capacity
• 🛡 Reinforce national energy security
• 🌿 Enable production of eco-friendly Euro-5 standard petroleum products
• 💰 Significantly decrease Bangladesh’s dependence on imported refined oil
• 🌏 Save foreign currency and ensure stability in the domestic energy supply chain

🤝 Largest IsDB Investment in Bangladesh

📊 This funding is set to elevate the ongoing development partnership between Bangladesh and the IsDB, which operates as an instrument of the Organisation of Islamic Cooperation (OIC), to new heights. According to the ERD, this marks the largest investment in a single project by the IsDB till now in Bangladesh — a notable milestone in the country’s multilateral financing landscape.

🌏 As one of Bangladesh’s key multilateral development partners, the IsDB has historically extended support through grants, project loans, trade financing, private sector funding, and export credit guarantees. The Eastern Refinery modernisation represents a step-change in the scale of this cooperation.

💬 PM Emphasises Concessional Financing

📞 Following the agreement signing, IsDB Group Chairman Dr Muhammad Al Jasser paid a courtesy call on Prime Minister Tarique Rahman, reiterating the bank’s commitment to supporting Bangladesh’s development priorities.

💬 During the meeting, the prime minister emphasised the importance of concessional financing and assured full government cooperation to deepen the partnership between Bangladesh and the IsDB.

🤝 The high-level engagement signals that both sides view the Eastern Refinery project as a cornerstone of broader Bangladesh-IsDB energy cooperation in the years ahead.

🌏 Strategic Context for Bangladesh Energy Security

🛢 For Bangladesh, the modernisation of Eastern Refinery addresses a long-standing vulnerability in the country’s energy supply chain. Currently, the refinery’s 15 lakh tonne capacity meets only a fraction of national petroleum demand, forcing Bangladesh to import a substantial volume of refined fuel at international prices — a major drag on foreign exchange reserves.

📊 Tripling capacity to 45 lakh tonnes per annum will allow Bangladesh to substitute a significant portion of refined fuel imports with domestic production. The shift to Euro-5 standard products will also align Bangladesh with international environmental standards, supporting the country’s automotive industry and reducing vehicular emissions.

💰 For industrial consumers — particularly the garment, textile, agriculture and transport sectors — the project promises more stable fuel supply, reduced exposure to global price volatility, and a stronger negotiating position in international energy markets.

🌏 The agreement also reinforces Bangladesh’s diplomatic positioning within the OIC bloc, demonstrating that Dhaka can leverage its Islamic identity to unlock strategic development financing at a scale previously unseen in single-project IsDB commitments — a template that could be replicated for other critical infrastructure projects in energy, transport and industrial corridors.

✅ With implementation expected over the coming years, Eastern Refinery’s modernisation will be closely watched as a bellwether of Bangladesh’s ability to deliver on large-scale energy infrastructure projects and translate multilateral financing into measurable industrial outcomes.