Bangladesh Faces Mounting Energy Crisis Amid Gas Shortages and Rising Import Costs
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Bangladesh is facing a severe multi-faceted energy crisis as domestic gas production continues to decline for the ninth consecutive year, compounded by difficulties in importing Liquefied Natural Gas (LNG) due to geopolitical volatility in the Middle East. The resulting fuel shortage has forced the shutdown of several power plants, leading to daily load-shedding of up to 3,500 megawatts.
The crisis is exacerbated by a strained national treasury, with the government owing approximately 440 billion BDT to private power plant operators. High fuel import costs are further draining foreign currency reserves, while the previous administration’s long-term reliance on imports over domestic gas exploration has left the country vulnerable to global price hikes and supply chain disruptions.
To mitigate the immediate deficit, industry experts and analysts suggest prioritizing oil-fired power generation, noting that at current global LNG prices, utilizing furnace oil is more cost-effective. Power Development Board (PDB) Chairman Md. Rezaul Karim confirmed that the government has allocated 6 billion BDT to increase output from oil-based plants by 4,000 megawatts. However, procurement challenges remain as the country competes in a tight international market, particularly through Singapore.
Data from Petrobangla and Rupantarita Prakritik Gas Company Limited (RPGCL) indicates that LNG imports have dropped, with only 68 cargoes arriving in the first eight months of this year compared to 71 during the same period last year. An industrial fire at a key floating terminal in July significantly curtailed supply, further deepening the shortage. While officials are attempting to secure additional shipments, recent tenders for two LNG cargoes faced limited interest, with one bid reaching a high of 26 USD per unit.
Beyond gas, the power sector is struggling with underperforming coal-fired plants. Technical faults and unpaid bills have hampered operations at several major facilities, including the Payra, Matarbari, and Barapukurio plants. Additionally, supply disruptions from the Adani power plant in India have further restricted grid stability.
Energy experts, including Professor M. Tamim, argue that while November’s cooling temperatures will naturally reduce electricity demand, the government must utilize this window to implement a robust recovery plan. Recommendations include forming a professional task force to oversee medium- and long-term energy security, potentially waiving customs duties on furnace oil to lower generation costs, and accelerating investment in renewable energy and domestic gas exploration.
Analysts emphasize that the economic cost of ongoing load-shedding far outweighs the expenditure required to stabilize energy supply. By increasing oil-fired production to 80 percent capacity and resolving technical issues at coal plants, officials believe the country could eliminate or significantly reduce the frequency of load-shedding in the coming months.
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