The technical faults in one of the two floating storage and regasification units (FSRUs) in Bangladesh, detected on July 21 this year, have had a cascading effect on various sectors. The suspension of liquefied natural gas (LNG) loading to the functioning FSRU on August 13 due to inclement weather further worsened the gas supply situation. These two events compounded the supply crunch at a time when the country’s normal gas demand-supply gap has already surpassed 1,300 million cubic feet per day (MMcfd). As natural gas contributes to around 40 percent of the country’s annual power generation, load-shedding frequently surpassed three gigawatts between July 26 and August 15.
Natural gas also powers captive generators and boilers for industries. The recent supply disruptions have thus prompted industry and power sector stakeholders to urge the government to build additional infrastructure for FSRUs and a land-based LNG terminal. Some stakeholders believe Bangladesh can cope with the high cost of LNG imports by raising power tariffs.
As tariff adjustment is unlikely to eliminate the fiscal pressure from LNG imports, exploring local and regional energy solutions and reducing demand for imported fossil fuels would prove to be a much better solution for the country.
According to estimates by the Institute for Energy Economics and Financial Analysis (IEEFA), Bangladesh’s import dependence in the energy sector, excluding biomass, reached 62.5 percent in FY2024-25. Further analysis concludes that the country relies on the international energy market for 59.5 percent of its energy supply (Note: Cross-border electricity imports contribute 3 percent).
Now that the government intends to build two new FSRUs and a land-based LNG terminal to meet future demand, Bangladesh’s primary energy mix could face a major shift. By 2030, LNG contribution to annual gas consumption could exceed 60 percent compared to around 33 percent in 2025. IEEFA also forecasts that Bangladesh’s exposure to the international fossil fuel market could rise to around 74 percent from 59.5 percent over the same period. These projections consider the government’s goal of adding 10.45 GW of renewable energy by 2030, the optimal utilisation of future nuclear plants, and a modest demand growth for liquefied petroleum gas (LPG) and coal.
Why increased LNG dependence won’t help
In 2025, Bangladesh spent around $3.8 billion (Tk 40,300 crore) to import 327.8 billion cubic feet (Bcf) of LNG for an average of around $12 per million British thermal units (MMBtu) (using BP’s approximate conversion factors). Excluding regasification and terminal charges, the import cost of LNG was over Tk 50 ($0.41) per cubic metre in 2025. But industries paid Tk 30 ($0.25) and Tk 31.5 ($0.26) per cubic metre for their processes and captive generators, respectively, due to a higher share of domestic gas in overall consumption (domestic gas production costs just over Tk 12 per cubic metre). If new terminals come online, LNG will likely have a major share in the country’s total gas consumption, creating a case for raising gas tariffs.
By 2030, LNG imports could rise to 730 Bcf, given a capacity utilisation of 65 percent of all terminals. A gas price of $12 per MMBtu will cost the country $8.5 billion (Tk 1.04 lakh crore) per annum. An uncertain global energy market could increase import bills to $14 billion (Tk 1.72 lakh crore), considering an average price of $20 per MMBtu.
Since Bangladesh relies on payment guarantees and loans by international agencies to import LNG, a demand surge may require additional loans/support from various agencies, which raises questions regarding the feasibility of expanding LNG capacity. Alternatively, the unaffordability of LNG may result in subdued capacity utilisation of new terminals.
Revisiting cost assumptions
Private power producers and businesses feel that Bangladesh’s household power tariffs are significantly lower than those of other countries, providing room for increasing the prices to accommodate more LNG.
However, according to the IEEFA analysis, a household in Delhi pays 4,140 Indian rupees ($43.3) monthly for 630 kilowatt-hour (kWh) as the government offers free electricity of up to 200 kWh. On the other hand, a Bangladeshi household incurs around Tk 7,200 ($59) for similar consumption. A closer inspection shows that Delhi households pay eight rupees ($0.084) per kWh for any energy consumption beyond 1,200 kWh, while their Bangladeshi counterparts are charged Tk 17.35 ($0.14) per kWh for units above 600kWh. Although Delhi’s electricity tariffs include higher surcharges and duties than Bangladesh’s, electricity is comparatively more expensive in Bangladesh.
On the industrial side, before the latest June 2026 price hikes, Bangladesh’s industries paid tariffs comparable to their Vietnamese peers. However, increasing tariffs due to imported LNG will affect the competitiveness of Bangladesh’s export-oriented industries in the international market.
An assessment of the FY2024-25 data shows that the generation cost of grid-based power, excluding gas-based plants, was over Tk 15.5 ($0.13) per kWh against the average generation cost of Tk 12.1 ($0.098) per kWh. If Bangladesh factors in the cost of imported LNG (for example, Tk 50 per cubic metre), the fuel cost in gas-based plants will rise by over Tk 6 ($0.049) per kWh, resulting in average revenue shortfall in grid power of up to Tk 7.7 ($0.063) from Tk 4.1 ($0.034) per kWh. Even after an increase of over 40 percent in bulk tariff, the revenue shortfall will still hover around Tk 50,000 crore ($4.1 billion).
Solutions lie closer to home
Reducing the country’s heavy reliance on gas requires careful transition planning, blending multiple country-level and regional solutions. For example, a combination of domestic gas and cross-border hydropower could drastically reduce the demand for imported LNG. Accelerated renewable energy deployment, battery energy storage systems (BESS), reduced system losses in the gas transmission and distribution network, demand-side energy efficiency measures, and technological shifts will further reduce LNG demand. Solar-powered charging stations could minimise the power demand created by battery-run three-wheelers from midnight to early morning, limiting the demand for gas further.
Bangladesh’s efforts over the next four to five years will define how it will navigate its energy sector challenges, and solutions such as the ones above can potentially shield it from possible uncertainty in the global fossil fuel market.
Shafiqul Alam is lead energy analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA).
Views expressed in this article are the author's own.
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