[🇧🇩] Energy Security of Bangladesh

[Saif]

https://www.newagebd.net/post/new-age-specials/314592/lng-reliance-deepens-energy-crisis-yet-bangladesh-doubles-down

LNG reliance deepens energy crisis, yet Bangladesh doubles down
Shahriar Azam . Dhaka 20 September, 2026, 05:53

Bangladesh is living through an energy crisis largely of its own making, born of a decade-long push to meet its energy needs through heavy reliance on imported fossil fuels.

Billions have been spent on liquified natural gas since its import began in 2018 but the gas crisis is far from over. Households have never seen a shortage reach this far with literally no supply for weeks now.

Yet, nearly every fix now on the table, from emergency spot-market cargoes to new floating LNG terminals, offers ways that started the problem in the first place.

Bangladesh first turned to imported LNG to plug a widening gap between demand and dwindling output from domestic fields, brushing aside warnings that tying the national grid to a volatile global market would eventually expose the country to shocks well beyond its control.

Those warnings have since played out in full. The closure of the Strait of Hormuz amid the latest Middle East conflict choked off a critical import corridor, triggering fuel queues that stretched for kilometres at filling stations, leaving families to go without cooking gas and forcing industrial production lines to scale back.

Yet the response drawn up by the government remains, in essence, a repeat of the old playbook: more LNG purchases, more regasification terminals – this time at prices markedly higher than those Bangladesh paid during the tenure of the Awami League government, which was deposed from power in 2024 by a student-led mass uprising amid a deepening economic crisis.

‘Additional floating LNG terminals cannot provide a sustainable solution,’ said energy expert Badrul Imam, who has argued for years that Bangladesh must prioritise exploring and developing its own gas reserves rather than deepening its reliance on imports.

The scale of that reliance is stark. Domestic gas production, including output from state-run Petrobangla and international oil companies, has fallen to around 1,600 million cubic feet per day, down from roughly 2,700 mmcfd in 2016 – a decline of more than 40% even as demand has climbed.

Bangladesh currently has two floating storage and regasification units in Maheshkhali. The latest emergency began with the disruption at one of them on July 21, but officials and analysts say the vulnerability runs far deeper.

Scrambling to secure cargoes on a volatile spot market, the Cabinet Committee on Government Purchase on September 2 approved deals with BP Singapore Pte Ltd at $28.03 per million British thermal units and Aramco Trading Singapore at $27.54 per MMBtu – well above the $20-$21.50 range of earlier tenders that had gone unapproved.

Officials estimate that every $1 rise in the price of LNG per unit adds roughly Tk 41.33 crore to the government’s bill, or at least Tk 165 crore per cargo.

The annual LNG subsidy for 2026-27 has been burned in just the first two months of the fiscal year.

Rather than reverse course, the government has doubled down.

On July 29 it signed a 13-year supply agreement with US-based Gunvor USA LLC for 117 LNG cargoes, locking in long-term volumes but not, analysts caution, insulating the country from price swings or from the geopolitical risk that has already disrupted supply once.

A third FSRU has been approved for Moheshkhali’sKutubdia, with three more floating terminals planned by 2029 at Payra, Mongla and Hiron Point – an expansion that, critics say, entrenches the very dependency that caused the crisis rather than resolving it.

State minister for power, energy and mineral resources Aninda Islam Amit on September 7 said in the parliament, the government was planning to sign contracts for at least two new FSRUs this year with a possibility of a third in the Mongla region. Recruitment of a transaction adviser for the 1000 mmcfdMatarbari land-based LNG terminal was in process.

Amit said domestic gas production is depleting at a rate of 150 mmcfd per year.

The government is committed to supply around 2,800 mmcfd of gas from imported LNG through new infrastructures by 2030, while domestic gas production will be increased to 2320 mmcfd through digging 150 wells by this timeframe, the state minister told parliament.

However, as a welcome move to fast tract clean energy transition, the cabinet on September 7 approved a proposal to exempt the import of machinery and parts required for setting up renewable solar plants from various taxes and duties for six months.

‘The energy sector is falling back into a vicious cycle of capacity payments,’ said FarseemMannanMohammedy, an energy expert, adding that such charges pile up regardless of whether the underlying facility – a power plant, an FSRU, a coal plant or a solar project – is even generating power.

He also pointed to a persistent lack of transparency in how these agreements are struck.

The Power Development Board paid out more than Tk 44,000 crore in capacity payments in the fiscal year through June 2025, a figure projected to top Tk 48,000 crore this year; the FSRUs alone cost an estimated $454,000 a day in such charges.

For the proposed third FSRU in Maheshkhali’sKutubjom, China National Energy Engineering & Construction Co will charge $3,42,000 per day as station charge.

Installed generation capacity stands at 29,158 megawatts across 137 plants, yet fuel shortages mean less than half of that can be used, indicating unplanned development.

Renewable energy remains a fraction of the mix: 1,446 megawatts on-grid and 378 megawatts off-grid, according to the Sustainable and Renewable Energy Development Authority, far short of the 20% by 2030 target set out in the ruling party’s manifesto.

On the ground, the toll is mounting. More than 900 textile mills have shut down or scaled back operations, officials and industry groups say, while steel, paper and other manufacturers are running well below capacity, threatening exports and jobs.

Low gas pressure has disrupted household cooking across the country, pushing families toward costlier alternatives as LPG prices climb, while long queues at CNG refuelling stations have become a fixture of daily life for autorickshaw and ride-share drivers.

Government ministers have conceded there is no quick fix. Zahed Ur Rahman, the prime minister’s adviser on information and broadcasting, recently said resolving the shortage fully could take at least two years – a timeline echoed separately by the power, energy and mineral resources minister and the finance minister.

For now, Bangladesh remains caught between an old strategy that helped create the crisis and a new one that largely extends it.

Breaking that cycle, analysts say, will require sustained investment in domestic exploration, tighter fiscal discipline over costly import contracts, and a genuine push toward energy sources the country does not have to import at all.​

 

[Saif]

Fuel shock to ripple across economy

The government’s latest fuel price hike is set to ripple across the economy, threatening to rekindle inflation just as it had begun to ease, experts say.

www.thedailystar.net

Fuel shock to ripple across economy

Experts say goods, services to get more expensive after Tk 20-a-litre rise; govt insists it had no choice

Md Asaduz Zaman , Sukanta Halder , and Shamima Rita

A filling station employee dispenses octane to a car after the Tk 20 per litre price hike for all four major petroleum products came into effect yesterday. The pump has posted notices displaying the new rates to avoid confusion among customers. The photo was taken in the capital’s Paribagh area. PHOTO: PRABIR DAS

The government’s latest fuel price hike is set to ripple across the economy, threatening to rekindle inflation just as it had begun to ease, experts say.

Higher transport fares, freight charges, irrigation expenses and production costs are now expected to push up the prices of goods and services, adding to the burden on households and businesses already grappling with elevated expenses.

The Tk 20-a-litre increase, which took effect yesterday, pushed diesel, petrol, octane and kerosene to their highest-ever retail prices. This marks the third fuel price hike since the BNP government assumed office in mid-February.

Diesel, the country’s most widely used fuel and the backbone of transport, agriculture and industry, now costs Tk 135 per litre, up from Tk 115. Before the US-Israeli war on Iran began, diesel was selling for Tk 100 a litre.

The government has defended the decision, saying it had become unavoidable amid surging import costs, a growing subsidy burden and rising risks of cross-border fuel smuggling.

Speaking at a press conference at the Secretariat yesterday, Anindya Islam Amit, state minister for power, energy and mineral resources, said maintaining the previous prices was no longer financially sustainable.

According to the minister, diesel would now cost about Tk 205 per litre had Bangladesh fully implemented its automatic fuel-pricing mechanism, under which domestic fuel prices are adjusted in line with international market rates. Even after the increase, the government is still subsidising diesel by about Tk 70 per litre, down from roughly Tk 90 previously.

“There was no alternative before us. Otherwise, the government would neither want nor choose to take such an unpopular decision,” he said.

The move comes amid volatility in the global energy market, with Brent crude remaining above the $100-a-barrel mark for much of the past two weeks.

Economists say the decision may reduce pressure on the government’s fuel subsidy bill but argue that the relief is largely fiscal rather than economic, as the burden is effectively being transferred to commuters, farmers, businesses and households.

They warn that the increase could drive up food prices, raise operating costs for firms already struggling with high borrowing costs and further weaken a job market that has struggled to recover for years.

The impact on transport has been immediate.

Bus operators on the Dhaka-Khulna route and other southern routes have already decided to raise fares by Tk 50 per passenger, according to transport owners.

Some operators imposed even steeper hikes. Islam Paribahan has raised fares by as much as Tk 100, said Md Hamid, one of its counter managers, taking the Dhaka-Thakurgaon fare to Tk 700. On some long-distance routes, passengers reported paying up to Tk 200 more.

The speed with which fares rose has heightened concerns that higher fuel costs will quickly spread through the broader economy via increased transport and freight expenses.

The Bangladesh Inland Container Depots Association (BICDA), for instance, has raised six service charges related to handling import, export and empty containers by 9.85 percent.

“The decision was taken to adjust the additional fuel cost,” said Md Ruhul Amin Sikder, BICDA secretary-general, following a meeting of association members yesterday morning.

The fuel price hike comes at a particularly sensitive time for the economy.

The government has recently announced a revised pay scale for public sector employees, but millions of workers in the private and informal sectors are unlikely to receive comparable wage adjustments. Real incomes are already under pressure. The wage rate index slowed to 8.05 percent in August from 8.22 percent in July, remaining below the inflation rate.

Nazneen Ahmed, executive director of the Centre for Policy Dialogue (CPD), said higher fuel prices would have economy-wide consequences, affecting everything from agricultural production and transportation to industrial operations.

“Think about how much the cost of operating a bus will increase from one end of the city to the other and the impact that will have on fares.”

Evidence of that was already visible on Dhaka roads yesterday.

Passengers said Meghla Transport buses operating between Gulistan and Kalabagan via Shahbagh, as well as Rajanigandha buses on the Chittagong Road-Mohammadpur route, were charging an additional Tk 5. Ride-sharing drivers were also demanding higher fares.

Some commuters also reported fewer buses on the roads.

Moni Begum, who works at BIRDEM Hospital, was waiting in Shahbagh for a bus to Jatrabari. She said she usually caught one soon after office hours, but few were running. “It was the same when I came to work in the morning.”

CPD chief Nazneen Ahmed argued that a more gradual adjustment could have achieved the government’s objective without generating such a sharp economic shock. “Inflation had slowed over the past two months, but this will create a new kind of pressure.”

Nazneen also believes diesel and kerosene prices should have been left unchanged because they have a disproportionate impact on lower-income households, public transportation and industries.

The timing of the fuel adjustment alongside the implementation of the new pay scale, she warned, could fan the flames of inflation.

“…because two things are happening simultaneously, inflationary expectations will increase and push prices higher.”

Deen Islam, an economics professor at Dhaka University, said the impact would extend well beyond transport costs. “The cost of getting loans and marketing will raise the prices of goods and services in one go.”

He suspects that Bangladesh may not have been adequately prepared for rapidly changing geopolitical realities and that the timing of such a policy intervention therefore required careful consideration.

In his view, policymakers face a difficult trade-off between maintaining subsidies and safeguarding fiscal stability. While higher prices create immediate economic pain, sustained subsidies merely defer the adjustment while adding longer-term fiscal risks.

“There is no optimal policy here,” Deen said.

Bangladesh is not alone in confronting this dilemma.

Several import-dependent economies in the region have faced similar pressures. Pakistan, which relies heavily on oil imports from Saudi Arabia and the United Arab Emirates through the Strait of Hormuz, raised diesel prices by about 20 percent in March.

The Energy and Mineral Resources Division maintains that fuel prices in neighbouring and several other Asian countries remain significantly higher than those in Bangladesh.

Anu Muhammad, former professor of economics at Jahangirnagar University, argued that the government could have cut the taxes and fees it collects on fuel rather than, in his words, “putting the burden on the entire economy”.

Tight revenue collection may explain why the authorities were “choosing the easy means”, he said. “Judging by the government’s approach, it seems to be trying to become unpopular very quickly.”

Beyond the policy debate, the effects are already being felt by consumers and workers.

Shaheen Al Mamun, a grocer in Dhaka’s West Kafrul area, said customers’ purchasing power had been declining steadily over the past two to three years. “Now, with fuel prices rising by such a large amount all at once, people’s suffering will only increase.”

Abdul Mannan, who has been pulling a rickshaw in Dhaka for 16 years, said he was uncertain whether he would be able to continue sending money home every week if essential goods became more expensive.

Saidul Islam, a rice farmer in Habiganj, estimated that the fuel hike would add around Tk 200 per katha to his cultivation costs. Expenses related to operating power tillers are expected to increase, while labour costs are likely to follow.

Mohammad Lutfor Rahman, an economics professor at Jahangirnagar University, said production costs are about to rise across almost all sectors.

Rising agricultural costs would affect food prices and disproportionately hurt daily-wage earners and private-sector workers whose incomes are unlikely to keep pace, he said.

“We may move towards stagflation, which means high inflation, declining purchasing power, rising inequality, and an increase in joblessness,” he said. With the job market stagnant and industrialisation unlikely to pick up, “the situation ahead may be challenging for Bangladesh”.

Business leaders said they were not surprised by the direction of the move but questioned its scale and timing.

“We knew the government would eventually raise prices, but the timing and magnitude of the increase are concerning,” said Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry.

He said businesses were already struggling with a prolonged energy crisis and that the fresh fuel price hike would place additional strain on production, logistics and household spending.

Taskeen urged all stakeholders to use fuel more efficiently and adopt austerity measures.​

 

[Saif]

Higher fuel prices to push up costs of production

The latest fuel price hike will raise production, transport and energy costs across Bangladesh, putting further pressure on businesses, exporters and consumers already facing high inflation and weak demand, business leaders said.

www.thedailystar.net

Higher fuel prices to push up costs of production

Business leaders say

Jagaran Chakma

Star Online Graphics

The latest fuel price hike will raise production, transport and energy costs across Bangladesh, putting further pressure on businesses, exporters and consumers already facing high inflation and weak demand, business leaders said.

The government yesterday raised the prices of diesel, octane, petrol and kerosene by Tk 20 a litre. The government cited sharply higher international fuel prices and freight costs amid the ongoing Middle East conflict.

The increase comes as businesses are already dealing with high interest rates, rising logistics costs, energy shortages and weak demand.

“The fuel price hike will push those costs up further and hurt our export competitiveness,” said Shams Mahmud, managing director of Shasha Denims Ltd.

For export-oriented industries, higher fuel prices will add to production costs, particularly for factories that rely on diesel generators during power or gas shortages.

“Energy security has still not been resolved. We are having to use diesel generators, which adds another layer of cost,” Shams said.

He said the impact would also be felt in agriculture, where diesel is widely used for irrigation and transportation, eventually pushing up food production and transport costs.

Anwar-ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries, said the increase would raise costs across agriculture, manufacturing and transport.

“Farmers’ costs will rise, which will increase food production costs. Industries will also face higher operating costs, while their capacity to produce and employ people will come under further pressure,” he said.

The higher fuel prices are also expected to add to inflationary pressure as the cost of transporting raw materials, imported goods, agricultural products and export shipments rises.

Parvez said the government should have consulted businesses before announcing such a sharp increase and should have raised prices gradually.

Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry, said the private sector was frustrated by the sudden increase.

“We knew the government would eventually raise prices, but the timing and magnitude of the increase are concerning,” he said.

The knitwear sector is particularly exposed because factories often rely on generators during load-shedding. Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, said the increase would raise both factory and transportation costs.

Factories would face higher costs for transporting fabrics, accessories, imported inputs and export shipments, he said.

“Industries are already going through a difficult period and facing various kinds of crises. At this point, it is not possible for the industry to absorb this additional burden,” Mohammad said.

Shams said higher transport and living costs would also reduce consumers’ disposable income and weaken domestic demand.

“When people have less disposable income, they spend less. That means buying and selling in the market will decline, and the internal economy will also take a hit,” he said.

He also warned that continued energy shortages could create industrial safety risks and raise concerns among international buyers about Bangladesh’s compliance standards.

Shams said the fuel price increase may also be influenced by the government’s efforts to reduce energy subsidies under its IMF programme.

The challenge, he said, is to implement such reforms without further undermining business competitiveness, consumer purchasing power and economic activity.​

 

[Saif]

An emergency action plan for a 100% renewable Bangladesh

A rapid transition to 100% renewable energy is the most urgent climate change crisis solution for Bangladesh.

www.thedailystar.net

An emergency action plan for a 100% renewable Bangladesh
Sajed Kamal