Alternatives To Addressing Bangladesh's Energy Crisis

Bangladesh is facing an escalating energy crisis.

- Mohammad Mosharraf Hossain

Widespread power shortages are disrupting households and businesses alike, while domestic gas reserves are depleting rapidly. This decline has forced many power plants to switch to imported liquefied natural gas (LNG), despite the sharp rise in spot market prices. Although the current situation is less severe than before, the sector remains highly vulnerable due to its heavy dependence on volatile and costly imported LNG, coal, and oil.

This growing reliance on imported fossil fuels is not only heightening the volatility of the energy sector but also straining public finances, depleting foreign currency reserves, and inflating subsidy burdens. The trend towards greater LNG use is particularly worrying and needs urgent reversal.

Since 2019, Bangladesh’s LNG import prices have fluctuated, with a sharp spike in 2022 due to global market conditions. Initially, some LNG deals—tied to a percentage of Brent crude prices—were comparatively cheaper. For instance, one long-term contract with OQ Trading was set at 11.90% of the three-month average Brent crude price, plus US$0.50 per MMBtu. However, the global energy shock in 2022 sent spot prices soaring, with some cargoes costing $35.89/MMBtu and $36.95/MMBtu. These high import costs persisted, even under long-term contracts with Qatar and Oman.

The severe gas shortage is hitting industries and fertilizer plants hardest, highlighting the need for a thorough reassessment of gas allocation. Identifying sectors where gas can be replaced by alternative fuels could free up supply for more productive and high-value uses.

CNG stations and piped gas to kitchens—still available in select areas—should be reviewed critically. While CNG offers environmental benefits and lower transport costs, and piped gas to households saves on cooking fuel imports, the current crisis requires prioritizing industrial and agricultural production over comfort and convenience.