THE Iran–America–Israel conflict has already begun to create ripple effects far beyond the battlefield and Bangladesh is feeling the pressure. The global energy market has turned volatile, and as a result, the government is facing a difficult situation. Fuel prices have been increased — petrol, diesel, octane and LPG — triggering a chain reaction across the economy. Transport fares have gone up, commodity prices have risen, and the burden has ultimately fallen on ordinary people. What we are witnessing is not just a temporary crisis, but a structural vulnerability that has been building for years.
The government’s recent announcement to generate 10,000 MW of solar power is therefore encouraging, but it must be seen in the context of a much deeper problem. Bangladesh’s increasing dependence on imported fossil fuels has left the economy exposed to global shocks. Petroleum, LNG and LPG have become central to our energy system, even as domestic gas reserves continue to decline. This dependence requires a large outflow of foreign currency, placing constant pressure on reserves. Over the past decade, energy consumption patterns have shifted significantly, moving away from domestic gas towards imported fuels. While domestic gas production once reached 2,750 million cubic feet per day in 2017, it has since declined sharply, even as demand in industries and urban areas continues to rise. By 2024–25, LNG demand has reached 7.41 million tons, a 19 per cent increase from the previous year, while petroleum demand has remained around 7 million tons annually. With pipeline gas connections suspended, LPG now serves 98 per cent of household cooking needs.
Recent geopolitical disruptions have further exposed the fragility of this system. The closure of the Strait of Hormuz has disrupted oil shipments from the Persian Gulf, affecting supply chains. As a result, more than half of Bangladesh’s power plants have reportedly remained idle due to fuel shortages. The consequences are already visible: the export-oriented garment sector has seen production capacity fall by up to 40 per cent because of irregular gas and electricity supply. What was once presented as a strategy for securing cheap and abundant fuel imports has instead become a long-term financial burden. Since 2018, LNG imports have cost the country around $18 billion, and projections suggest that by 2030, Bangladesh may need to spend at least $8.5 billion annually to meet demand.
This growing reliance on LNG is increasingly risky. Bangladesh has begun purchasing LNG from the volatile spot market, competing directly with wealthier countries in Europe and East Asia. At the same time, long-term agreements such as the 15-year deal signed in January 2026 with the United States for up to 5 million tons annually may ensure supply stability but also deepen dependence on fossil fuels. Meanwhile, the cost of electricity generation remains high. Furnace oil, which still contributes over 10 per cent of power generation, costs around Tk 18.41 per unit, compared to Tk 14.86 for LNG and just Tk 9.09 for solar power. Despite this, the transport sector continues to rely almost entirely on imported petroleum, consuming over 63 per cent of fuel, while agriculture remains dependent on diesel-powered irrigation.
The economic implications are significant. During the Boro season, over 1.22 million diesel-powered irrigation pumps consume large volumes of imported fuel, requiring substantial subsidies. The industrial sector, heavily reliant on gas and electricity, is also suffering from supply shortages, with reduced production threatening export targets and employment. Taken together, these pressures highlight a fundamental issue: Bangladesh’s energy model is no longer sustainable.
This moment, however, also presents an opportunity. Moving away from import-dependent fossil fuels towards renewable energy is no longer optional but necessary. Regional examples offer useful lessons. In Pakistan, for instance, rising electricity costs during its recent economic crisis pushed both households and businesses towards solar power. By removing import duties and taxes on solar equipment, the government enabled rapid expansion of rooftop solar installations. From importing less than 1,000 MW of solar panels in 2018, Pakistan reached 51,000 MW by early 2026, with decentralised solar capacity significantly reducing its oil and gas import bill.
Bangladesh can pursue a similar path. With 42.6 million households consuming more than half of the national electricity supply, there is substantial potential for rooftop solar expansion. Around 20 million households could install at least 1 kW systems, potentially adding up to 16,000 MW of capacity and generating 26,000 million units of electricity annually. This would significantly reduce reliance on expensive furnace oil and save large amounts of foreign exchange. Government buildings, educational institutions, and water bodies also offer untapped potential for solar power generation, including floating solar systems that address land constraints.
In agriculture, replacing diesel-powered irrigation pumps with solar alternatives could reduce import costs and subsidy burdens. However, current progress remains slow, with only a few hundred solar pumps installed each year. A coordinated effort involving public agencies is needed to scale up installation to at least 10,000 units annually. Similarly, policy support in the form of low-interest financing, tax exemptions, and targeted subsidies could accelerate adoption in both residential and industrial sectors.
The transport sector also requires urgent attention. Introducing electric buses in major cities and reducing import duties on electric vehicles could help decrease petroleum dependence. At the same time, broader behavioural shifts such as encouraging energy efficiency, reducing unnecessary travel and promoting rooftop solar can complement structural reforms.
To make this transition effective, policy alignment is essential. Import duties and VAT on renewable energy equipment should be withdrawn and financial incentives should be introduced to encourage widespread adoption. Allocating a larger share of the national energy budget to renewables would signal a clear shift in priorities. Without such measures, vested interests in fossil fuel imports and conventional energy infrastructure may continue to slow progress.
Bangladesh now stands at a crossroads. Continuing along the current path will deepen economic vulnerability and environmental risks. A decisive shift towards renewable energy, on the other hand, offers a way to strengthen energy security, reduce financial strain and build resilience against global shocks. The choice is no longer about preference, it is about necessity.
Gouranga Nandy is a freelance journalist.
