[🇧🇩] Energy Security of Bangladesh

[Saif]

BPC profit surges on falling global oil prices

Profits by the state-owned Bangladesh Petroleum Corporation have continued to increase on the back of falling prices of petroleum fuel oils on the global market...

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BPC profit surges on falling global oil prices
Downward revisions needed to push down inflation: experts
Shakahwat Hossain 28 December, 2025, 00:40

Profits by the state-owned Bangladesh Petroleum Corporation have continued to increase on the back of falling prices of petroleum fuel oils on the global market.

But the consumers have been deprived of the falling import prices as the BPC, the lone marketing entity of fuel oils, has kept the domestic prices of the petroleum items at the elevated levels.

Energy Division officials revealed that the BPC had made a net profit of Tk 4,216 crore in the 2024- 25 financial year when the crude oil sold at $70 per barrel on average.

The BPC’s profit in FY25 grew more than 9 per cent over the net profit of Tk 3,943 crore in FY24, taking its overall profits to around Tk 64,000 crore in the past 11 years.

Energy officials said that the BPC’s average monthly profit of Tk 350 crore in FY25 grew further to around TK 400 crore in the first five months of the current FY26 as the average prices of crude oils had dropped below $60 per barrel.

On December 1, 2025, the BPC increased the prices of all categories of fuel by Tk 2 per litre.

Diesel is now selling at Tk 104, octane at Tk 124, petrol at Tk 120 and kerosene at Tk 116.

The previous price of each litre of diesel at Tk 102, octane at Tk 122, petrol at Tk 118 and kerosene at Tk 114 -- fixed on June 1 -- was kept unchanged by the BPC in its periodical review made in August 1, 2025 in line with the automatic price adjustment formula.

Introduced in February, 2024 to appease the International Monetary Fund, the price adjustment formula has blocked the scope for public hearing for price hike or decrease of fuel oils.

Consumer Association of Bangladesh energy adviser M Shamsul Alam criticised the present interim government for treating the BPC as a profit-making entity like the previous autocratic Awami League regime used to do.

Extreme unfairness has been going on in fixing the fuel oil prices, he said.

According to the Commodity Markets Outlook released by the World Bank in October 2025, the global oil glut has expanded significantly in 2025 and is expected to rise next year to 65 per cent above the most recent high -- in 2020.

Brent crude oil prices are forecast to fall from an average of $68 in 2025 to $60 in 2026 — a five-year low while the overall energy prices are forecast to fall by 12 per cent in 2025 and a further 10 per cent in 2026, added the WB report.

Policy Exchange Bangladesh chair M Masrur Reaz said that the interim government had failed to uphold its commitments to reflect international market prices in the domestic fuel oil prices.

The government should review the prices with no major price-hike forecast of petroleum products in the next year, he said.

Downward revisions of fuel oils will bring positive impacts across the board, he observed.

Majority people who have been struggling to maintain their daily expenditures amid high inflation over the past three years will get relief with the downward adjustment of fuel oil items, he further said.

On August 2022, a record 50 per cent hike in the prices of fuel oil items pushed up inflation in country.

Former World Bank Dhaka office chief economist Zahid Hussain said that the pressure on the fiscal side was always slim when prices of crude petroleum oils stay below $60 dollar per barrel.​

 

[Saif]

How our electric grid fosters inequality

At 2pm on a sweltering April day in a small workshop in rural Mymensingh, a welding machine goes silent.

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How our electric grid fosters inequality

This state-designed monopoly logic feeds food inflation by pushing energy volatility from the grid into food prices. PHOTO: FREEPIK
At 2pm on a sweltering April day in a small workshop in rural Mymensingh, a welding machine goes silent. It was not because there was no electricity connection, but because the power had vanished again. At that exact moment, in a corporate high-rise in Dhaka, an air conditioner hums uninterrupted.

This split-screen reality exposes a structural reality: what Bangladesh has built is not a single power system serving a single economy, but a divided one.

On one side sits the state economy: an electricity regime engineered around megawatts contracted, capacity payments guaranteed, and fiscal stability preserved. It reliably powers government narratives, corporate enclaves, and politically insulated industry. Here, energy risk is underwritten by sovereign guarantees and absorbed by the public purse.

On the other side sits the bottom-of-the-pyramid economy, spanning agriculture, agri-processing, cottage industries, and small manufacturing. Here, electricity is not a convenience but a precondition for survival. The grid reaches farms, mills, cold storages, and workshops alike, but reliability does not. Risk here is not insured; it is absorbed by farmers through failed irrigation cycles, by poultry owners through heat losses, by millers through spoiled grain, and ultimately by consumers through food inflation.

For the millions of enterprises in this second economy, the celebrated "100 percent electrification" milestone is a vanity metric. Official data shows access exceeding 99 percent, yet productivity remains hostage to reliability. During the heatwaves of 2024, while urban centres faced manageable load shedding, rural feeder lines sustaining the productive base faced outages lasting six to seven hours a day. Small manufacturers were forced to burn diesel at over Tk 106 per litre just to meet deadlines—a massive cost increase over grid tariffs.

This instability bleeds directly into agriculture. Unreliable power forces farmers into gruelling nocturnal irrigation cycles and exposes poultry operations to catastrophic heat losses; industry bodies reported poultry sector losses running into Tk 16,000 crore over a single month. Cold storage operators are pushed onto diesel simply to prevent crops from rotting.

This state-designed monopoly logic feeds food inflation by pushing energy volatility from the grid into food prices. When energy risk is forced onto producers, it results in higher food prices, lower wages, and lost jobs. At the end of this value chain sit households: those that cannot absorb the shock go without a meal or two.

As a cottage industry's load approaches and crosses roughly the 50-kilowatt threshold, utility rules typically require a shift to high-tension supply, often necessitating the installation of a private 11 kV/0.4 kV substation, an investment that can cost Tk 15 to 25 lakh. Connection is permitted, but scaling is disincentivised.

Only once this trap is visible does the architecture behind it come into focus. For more than a decade, under the indemnity of the Speedy Supply of Power and Energy (Special Provision) Act, procurement rules prioritised speed over scrutiny, allowing capacity to be contracted without competitive discipline.

The fiscal consequences are now clear. In the revised FY 2024-25 budget, Tk 62,000 crore was allocated to power-sector subsidies. Recent analysis suggests that in FY 2023-2024, nearly 81 percent of this allocation, to the tune of Tk 32,000 crore, was absorbed by capacity charges. These are payments to plants regardless of whether electricity is actually produced.

This stark division is not a technical inevitability; it is a fiscal choice. The path forward requires treating the bottom-of-the-pyramid economy not as a charity case, but as the engine of growth. The updated Renewable Energy Policy 2025 explicitly recognises peer-to-peer electricity trading. If operationalised, a cluster of rice mills in Bogura or a weaving village in Sirajganj could generate, store, and trade solar power through a swarm-grid model. Decentralisation here is not ideological; it is about yield stability and food system resilience.

A quieter reform lies in finance. Every month, millions of farmers and rural entrepreneurs pay electricity bills. By integrating smart-meter usage with digital credit scoring, a farmer's steady irrigation history or a processor's consistent cold storage demand can become bankable proof of productivity. Finance can then follow performance, not paperwork—transforming energy from a recurring expense into financial infrastructure.

As long as the power sector protects the state economy while extracting from agriculture and small business, food inflation and broad-based unemployment will remain structural features of the economy. This is not a future risk; it is the present cost of a system that keeps capital comfortable and production expendable.

As such, the lights will stay on in the high-rises. The darkness has already been outsourced to the fields and workshops below.

Saba El Kabir is a development practitioner and founder of Cultivera Limited.​

 

[Saif]

Is the LNG pathway sustainable for Bangladesh?

The combination of soaring natural gas demand and plummeting domestic production has pushed the Bangladesh government to diversify its energy sources. In the past, various plans, including the Integrated Energy and Power Master Plan 2023,

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Is the LNG pathway sustainable for Bangladesh?
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FILE VISUAL: ANWAR SOHEL

The combination of soaring natural gas demand and plummeting domestic production has pushed the Bangladesh government to diversify its energy sources. In the past, various plans, including the Integrated Energy and Power Master Plan 2023, have attempted to address this concern, but they have driven a shift towards imported liquefied natural gas (LNG) instead. As a result, the LNG pathway, pursued as a fuel diversification strategy without enough investment in domestic gas exploration, has become an economic burden for the country.


With surging LNG imports, the government has drastically increased gas tariffs, making industrial production expensive. Yet, the government pays a hefty annual subsidy on account of LNG imports. Unless Bangladesh streamlines its energy pathway, the reliance on imported LNG may further expose the vulnerability of its energy system, leading to a recurring subsidy problem.

Bangladesh's LNG imports surged by 21.7 percent and 13.86 percent in FY2023–24 and FY2024-25, respectively, following a 15.45 percent reduction in FY2022-23. The country's LNG imports declined in FY2022–23 due to elevated spot market prices and tight fiscal conditions. Imports, however, rebounded in the subsequent years because of affordable LNG prices.

While the contribution of expensive LNG to total gas consumption stands at 28.8 percent, the government is gradually passing the additional costs on to different sectors, excluding grid-based power generation. Between February 2023 and April 2025, the government raised gas tariffs for industrial production twice and captive power generation thrice. The gas price for industrial production increased from Tk 16/ cubic metre (m3) ($0.13/m3) to Tk 40/m3 ($0.33/m3), while the gas price for captive power generation soared to Tk 42/m3 ($0.33/m3) from the same level.

On a ballpark estimate, industries, excluding the fertiliser sector, incurred additional costs of approximately Tk 4,560 crore ($0.37 billion) in FY2023–24 compared with FY2022–23 due to gas price hikes (calculated using gas consumption and tariffs for the respective years). This occurred despite a 5.9 percent year-on-year decline in gas supply to the sector.

Likewise, the government received additional payments of approximately Tk 3,160 crore ($0.26 billion) from gas-fired captive power generators during the same period, driven by higher tariffs. Notably, gas supply to captive power generation declined by 6.5 percent.

Bangladesh's average gas supply in FY2024-25 was 2,679 million cubic feet per day (MMcfd)—derived from the annual consumption of 978 billion cubic feet (Bcf)—against a demand of around 4,000MMcfd. This implies a gas supply deficit of more than 1,300MMcfd. With domestic production declining at an average rate of 4.64 percent per annum since FY2018–19, this demand-supply gap may widen further, potentially prompting the government to enhance regasification capacity and increase LNG imports.

While the government has set a goal of adding local gas of 648MMcfd and 1,500MMcfd to the grid by 2025 and 2028, respectively, it should keep sufficient funds for exploration. The allocation to the energy sector as part of the annual development programme stands at a paltry Tk 2,086 crore ($0.17 billion), which is inadequate to achieve this year's goal. Available reports suggest that the government's initiatives may add only 143MMcfd of gas to the grid in 2026.

The government is also planning to float an international tender to explore onshore gas to ramp up local production. In the event of moderate success, if Bangladesh connects 1,000MMcfd of new gas, including the announced 143MMcfd, to the grid by FY2029–30, domestic gas production will reach 2,500MMcfd (assuming existing gas supply continues to decline at the current rate of 4.64 percent per annum). Therefore, even to meet the current demand of 4,000MMcfd in FY2029–30, the country will need to import 1,500MMcfd of LNG. The annual LNG import will then rise to 547Bcf, making an annual payment obligation of more than $5 billion in FY2029–30 (taking $10/MMBtu of LNG, based on Bangladesh's long-term contracts and recent spot-market purchases).

In a less favourable scenario of limited local discovery and high price volatility, Bangladesh could pay as much as $8.5 billion in FY2029-30 on account of LNG imports (assuming the government adds 500MMcfd of domestic gas to the grid, existing gas supply continues to fall at the current rate of 4.64 percent per annum, and the average LNG price reaches $12/MMBtu). Alternatively, the unaffordability of LNG and fiscal constraints could worsen the energy supply shortfall, thereby stifling economic activities.

Despite massive gas price hikes in the last two-and-a-half years, the government allocated a subsidy of Tk 9,000 crore ($0.74 billion) for LNG imports in its FY2025–26 budget. Low gas tariff for grid-based power plants is one of the key reasons behind this hefty subsidy burden. For instance, the government charges power plants at Tk 14.75/m3 ($0.12/m3), which means it must provide a subsidy of around Tk 29.85/m3 ($0.24/m3) if the LNG price is $10/MMBtu.

High LNG dependence in the near future may prompt the government to raise gas tariffs for grid-based power plants, affecting the Bangladesh Power Development Board (BPDB). With rising generation costs, BPDB's revenue shortfall is likely to widen. The government might pivot to adjust power tariffs to provide BPDB some relief.

As Bangladesh is yet to lock in a very high LNG dependence, the best course of action for the country is to design an alternative energy pathway, focusing on utilising renewable energy and local gas. There are two concrete examples. In 2020, Vietnam installed more than nine gigawatts (GW) of rooftop solar capacity, backed by a guaranteed feed-in-tariff. Pakistan imported solar panels and battery packs of 17GW and 1.25 gigawatt-hours (GWh) capacities in 2024, leading to a solar boom amid the country's energy supply crunch and unaffordable power tariffs. This surge in solar power generation resulted in a subdued demand for LNG in Pakistan.

The key to Bangladesh's success in enhancing energy system resilience is to expand renewable energy at a faster rate by focusing on decentralised systems like rooftop solar. Meanwhile, the government can allocate sufficient budgetary resources to explore local gas and strengthen energy efficiency to wean itself off its LNG reliance.

Shafiqul Alam is lead energy analyst for Bangladesh at Institute for Energy Economics and Financial Analysis (IEEFA).​