Bangladesh may be heading toward its first major crisis under the new government—not a political scandal, not a constitutional deadlock, but something far more immediate and destabilizing: fuel. What appears at first glance to be a supply issue is, in reality, a deeply interconnected crisis involving foreign reserves, global geopolitics, industrial production, and public trust.
The warning signs are already visible—fuel rationing, rising import costs, gas shortages, and growing dependence on volatile international markets. The question is no longer whether a crisis is coming, but how severe it will be—and whether the government is prepared to handle it.
At the heart of Bangladesh’s fuel vulnerability lies a structural problem: extreme dependence on imports. The country imports nearly 95% of its energy needs, making it highly exposed to global market shocks.
This dependence has deepened over the years. In 2023, around 46% of total energy supply came from imports, and in the power sector, imports accounted for as much as 65% of energy needs.
Natural gas, once the backbone of Bangladesh’s energy system, is no longer sufficient. Domestic production has declined, while demand continues to rise. As a result, the country has increasingly turned to liquefied natural gas (LNG), whose share has grown significantly in recent years.
But LNG is not a stable solution—it is expensive, volatile, and tied to global geopolitics. And right now, that geopolitics is working against Bangladesh.
Global Shock: War and Energy Markets
The current fuel crisis cannot be understood without looking at global events. Conflicts in the Middle East have disrupted critical supply routes such as the Strait of Hormuz, through which a significant portion of Bangladesh’s fuel imports pass.
As a result LNG shipments from key suppliers like Qatar have been disrupted, prices have surged dramatically, Bangladesh has been forced to buy fuel from the spot market at much higher rates.
For example, LNG prices have jumped from around $10 per mmBtu earlier in the year to over $28 per mmBtu in recent purchases.
This is not just a price issue—it is a fiscal shock. Bangladesh’s annual fossil fuel import bill is projected to rise by $4.8 billion (a 40% increase), putting enormous pressure on foreign exchange reserves.
In simple terms: the country is paying more dollars for less energy.
Fuel shortages are not confined to petrol pumps—they directly affect electricity generation. Bangladesh’s power sector relies heavily on gas, and when gas supply falls, power plants simply cannot operate.
Currently, around 23% of power plants are inoperable due to gas shortages.Nearly half of installed power capacity has been left idle in some cases. Load shedding has increased significantly across the country.Industries are facing power cuts of up to five hours a day, disrupting production and increasing costs.
To compensate, Bangladesh is turning to coal-based power, which is almost twice as expensive as gas-based generation. This creates a vicious cycle: fuel shortage → power shortage → expensive alternatives → more financial pressure.
The fuel crisis is already spilling over into the broader economy:
1. Industrial slowdown
The ready-made garment (RMG) sector—responsible for over 80% of exports—is particularly vulnerable. Reduced gas pressure and supply disruptions are forcing factories to operate at 30–40% capacity in some cases.
2. Rising costs
Fuel price increases push up transportation and production costs, which ultimately translate into higher prices for consumers.
3. Pressure on foreign reserves
With rising import bills, Bangladesh is seeking over $2 billion in external financing to stabilize its fuel supply.
4. Risk of inflation
Higher fuel costs weaken the currency and increase inflation, forcing the central bank to consider tighter monetary policies.
In short, the fuel crisis is not just an energy issue—it is a full-scale economic threat.
Beyond statistics, the fuel crisis is already affecting daily life.Fuel rationing has been introduced to control demand. Long queues at filling stations are becoming common. In future, fertilizer factories can be shut down, affecting agriculture. For ordinary citizens, this means: higher transport costs, unreliable electricity, increased cost of living. As always, the burden falls disproportionately on the lower and middle classes.
The current crisis is not an isolated event—it is part of a pattern. Several structural weaknesses make Bangladesh particularly vulnerable:
1. Overdependence on imports
Heavy reliance on imported fuel leaves the country exposed to global price shocks.
2. Slow energy transition
Renewable energy remains underdeveloped, contributing only around 2% of the energy mix in recent years.
3. Weak long-term planning
Despite recurring crises, investment in domestic energy exploration and diversification has been limited.
4. Financial inefficiencies
Rising LNG imports and subsidies are putting pressure on institutions like Petrobangla, weakening the overall energy sector.
This is where the issue becomes political.
Energy crises are uniquely dangerous for governments because they are immediate, visible, emotionally charged. People can tolerate abstract economic problems—but not daily power cuts or fuel shortages.
The new government now faces a critical challenge:
- Can it secure a stable fuel supply?
- Can it manage prices without triggering inflation?
- Can it communicate effectively and maintain public trust?
Failure on any of these fronts could quickly turn an energy crisis into a political crisis.
The government has already taken short-term measures fuel rationing, emergency LNG purchases, and seeking international financing.
But these are temporary fixes.
The real solution lies in diversifying energy sources, accelerating renewable energy, and reducing dependence on volatile global markets. Without structural reform, Bangladesh risks falling into the same cycle again—and perhaps more severely next time.
In short, the fuel crisis is not just a policy challenge—it is a test of governance, foresight and resilience. For the new government, it may well become the first defining moment of its tenure.
