Dhaka, Bangladesh, 3 September 2026 - The Government of Bangladesh and the Islamic Development Bank (IsDB) signed US$ 1 billion financing agreement for the Modernization and Expansion of the Eastern Refinery Project.

Dr. Mohammad Mizanur Rahman, Additional Secretary (Admin, ICT and Middle East), Economic Relations Division, Ministry of Finance, signed on behalf of the Government of Bangladesh, and Mr. Anasse Aissami, Director General, Country Operations, signed on behalf of the IsDB.

The signing was witnessed by H.E. Mr. Tarique Rahman, Hon’ble Prime Minister of Bangladesh; H.E. Mr. Amir Khasru Mahmud Chowdhury, Minister of Finance and Planning and IsDB Governor; and H.E. Dr. Muhammad Al Jasser, Chairman of the IsDB Group.

IsDB's Board of Executive Directors approved the financing at its 367th meeting, held on 16 June 2026 during the 2026 IsDB Group Annual Meetings in Baku, Republic of Azerbaijan.

The US$2.5 billion project comprises approximately US$1 billion in IsDB financing and around US$1.5 billion in contributions (including taxes, customs duty, and VAT) from the Government of Bangladesh. It is expected to be completed in five years. It will add three million metric tons of annual refining capacity, raising the refinery's total capacity to 4.5 million metric tons per annum.

The expansion will strengthen Bangladesh's energy security by increasing domestic refining capacity and reducing dependence on imported refined petroleum products. Local refining of imported crude oil is expected to save about US$394 million in foreign exchange each year.

"Today's signing marks a major milestone in IsDB's long-standing partnership with Bangladesh. 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. This financing will help build greater economic resilience and deliver lasting benefits for businesses, workers, farmers, and households across Bangladesh," said H.E. Dr. Muhammad Al Jasser.

The upgraded refinery will process a broader range of crude oils and produce 15 types of refined petroleum products. It is expected to support a 5 percent reduction in the cost of major petroleum products and enable production to meet Euro 5 standards, replacing the current Euro 2 grade.