Bangladesh Faces Persistent Energy Crisis Amid Struggles to Reduce Import Dependency and Boost Domestic Exploration
Photo Collected
Bangladesh’s energy sector is facing a critical juncture as the government navigates a deepening crisis marked by severe gas shortages, frequent power outages, and a reliance on costly, import-dependent strategies. Despite initiating several long-term projects, officials acknowledge that systemic challenges—compounded by geopolitical tensions in the Middle East and the legacy of the previous administration—continue to stifle immediate relief efforts.
State Minister for Power, Energy, and Mineral Resources Anindya Islam Amit defended the government’s performance, asserting that significant progress has been made within the last six months. Key initiatives include the invitation of international tenders for offshore oil and gas exploration, the commencement of a new oil refinery project with double the existing capacity, and plans for a new floating LNG terminal. The government has also eliminated import duties on renewable energy equipment to stimulate growth in the solar sector.
However, industry experts and analysts argue that the response has been sluggish. The country remains heavily reliant on expensive, government-to-government fuel and LNG contracts, many of which bypass competitive bidding processes. This lack of transparency has led to supply chain bottlenecks, particularly following technical disruptions at the Excelerate Energy LNG terminal. Domestic gas production has also plummeted, falling from 2.7 billion cubic feet per day in 2017 to approximately 1.63 billion cubic feet today, well below the daily demand of 3.8 billion cubic feet.
The government inherited a staggering financial burden from the previous administration, including approximately 43 billion taka in outstanding arrears owed to power plant operators. While the interim government made strides in clearing some debts, the ongoing “capacity charge” payments for idle power plants continue to strain the national exchequer. These charges are a direct result of former policies that incentivized the construction of excess power capacity without securing adequate fuel supplies.
A central point of contention is the government’s plan to permit private sector participation in the retail sale of refined petroleum products—a move critics fear could destabilize market prices, citing the precedent set by the largely unregulated and volatile LPG market. Furthermore, the ambitious plan to drill 150 new gas wells has stalled, with only 30 completed to date, falling significantly behind the target of 50 wells for 2025.
Research Director at the Centre for Policy Dialogue (CPD), Khondaker Golam Moazzem, noted that while the government has shown intent to reduce import reliance, the transition requires time and better management. He criticized the persistent bureaucratic delays and warned against privatizing fuel distribution, stating it would likely increase financial burdens on both the state and consumers without ensuring stability.
As the administration prepares to table a ten-year master plan for the energy sector in the upcoming parliamentary session, the focus remains on balancing long-term structural reforms with the immediate need to secure energy supplies. With the current generation capacity of 14,000 to 16,000 megawatts falling short of the peak demand during crises, the government faces sustained pressure to restore operational efficiency and fiscal sanity to the nation’s energy infrastructure.
0%
0%
0%
0%
