Bangladesh has signed a $1 billion financing agreement with the Islamic Development Bank (IsDB) to modernise and expand Eastern Refinery, the lender’s largest single project investment in the country to date.

The agreement, signed on Thursday, is expected to lift the refinery’s annual crude processing capacity from 1.5 million tonnes to 4.5 million tonnes.

Economic Relations Division Additional Secretary Dr Mohammad Mizanur Rahman signed on behalf of the government, while IsDB Country Programmes Director General Anasse Aissami signed for the lender.

Prime Minister Tarique Rahman, Finance Minister Amir Khasru Mahmud Chowdhury and IsDB Group Chairman Dr Muhammad Al-Jasser attended the ceremony.

Bangladesh Petroleum Corporation, under the Energy and Mineral Resources Division, will implement the project.

The government expects the expansion to reduce dependence on imported refined fuel and strengthen energy security. The project will also create an opportunity to produce Euro-5 standard petroleum products. The new refining capacity is expected to play an important role in meeting growing domestic demand.

Following the signing, Al-Jasser met Prime Minister Tarique Rahman and pledged continued support for Bangladesh’s development priorities.

Rahman emphasised the importance of concessional development financing and assured the government’s cooperation in deepening ties with the lender.

The Islamic Development Bank is among Bangladesh’s leading multilateral development partners, according to ERD. Since its establishment, the lender has supported Bangladesh’s socioeconomic development through grants, project loans, trade finance, private-sector financing and export credit guarantees, among other forms of assistance.