More LNG is not the answer to Bangladesh’s energy crisis

Bangladesh's energy sector is grappling with significant challenges due to technical issues affecting its floating storage and regasification units (FSRUs). These problems have intensified the country's energy supply crisis, which already saw a demand-supply gap of over 1,300 million cubic feet per day (MMcfd) in 2026. Natural gas is crucial to Bangladesh's power generation, accounting for around 40% of its annual output, and contributes to various industries.

The recent disruptions in LNG supply have led to load shedding exceeding 3 gigawatts (GW) between July and August 2026, affecting the economy.

Stakeholders have urged the government to develop additional infrastructure for FSRUs and a land-based LNG terminal, with some suggesting that raising power tariffs could help offset the high cost of LNG imports. However, this solution is unlikely to alleviate the fiscal pressure from LNG imports. Bangladesh heavily relies on the international energy market, with 59.5% of its energy supply imported, and this dependence could rise to 74% by 2030, even with plans to increase renewable energy generation.

The country spent around USD3.8 billion (BDT403 billion) on LNG imports in 2025, averaging USD12/million British thermal units (MMBtu). Excluding charges, the import cost was over BDT50/cubic metre (m3) (USD0.41/m3). If new terminals become operational, LNG will likely dominate the country's gas consumption, potentially leading to higher gas tariffs.

By 2030, LNG imports could reach 730 billion cubic feet (Bcf), representing 65% capacity utilisation at all terminals. This could result in an annual cost of USD8.5 billion (BDT1,044 billion) at an average import price of USD12/MMBtu and USD14 billion (BDT1,719 billion) at USD20/MMBtu.

Increasing LNG dependence poses a risk to Bangladesh's competitiveness, as higher tariffs may affect the prices of exported goods. Moreover, the fuel cost in grid-based power plants could rise by over BDT6/kWh (USD0.049/kWh), leading to a revenue shortfall of up to BDT7.7/kWh (USD0.063/kWh) for grid power. While increasing household tariffs might address some of the issues, household electricity tariffs in Bangladesh are already significantly lower than those in Delhi, India.

The generation cost of grid-based power in Bangladesh is also higher than in other countries, further exacerbating the problem.

To address the energy crisis, policymakers must consider domestic and regional solutions, such as increasing renewable energy deployment, implementing battery energy storage systems, and enhancing cross-border hydropower projects. These options could help reduce Bangladesh's heavy reliance on imported LNG and improve the country's energy security.