VULNERABILITY to external energy shocks has once again come into sharp focus amid the ongoing Israeli-US war on Iran and its fallout on the Middle East. The country’s heavy reliance on imported fossil fuels, particularly from the geopolitically sensitive Middle East, leaves it exposed to sudden supply disruptions and price volatility. Although the recent ceasefire between the United States and Iran offers temporary relief, it would be imprudent to interpret it as a lasting solution to deep structural risks. Global energy markets still remain fragile and Bangladesh, with its limited domestic production and declining gas reserves, is particularly vulnerable. Given this vulnerability, energy experts at a seminar that the Bangladesh Institute of International and Strategic Studies organised on April 8 have rightly talked about the urgent need for building a strategic energy reserve. The experts say that the reality is stark, with the gas production having declined remarkably, renewable energy having a negligible share and dependence on imported liquefied natural gas and refined fuels continuing to rise. In such a context, a strategic energy reserve is not a luxury but an essential safeguard. It can function as a form of national insurance, ensuring continuity during crises and stabilising domestic markets when external shocks occur.
Without such a buffer, the country is likely to face repeated economic disruptions, inflationary pressure and pressure on foreign exchange reserves, which will undermine both growth and stability. The annual energy import bill, already exceeding $13 billion, is estimated to rise further amid global price fluctuations, putting immense pressure on balance of payments. Combined with capacity charges and subsidies, the total financial burden becomes unsustainable. A well-managed reserve, however, could offset this vulnerability. By adopting, what experts say, a counter-cyclical purchasing strategy by buying fuel when prices are low and using reserves when prices surge, the country could reduce import costs, ensure domestic price stability and save foreign exchange. Many countries maintain reserves covering at least 90 days of consumption while some, like Japan, extend this to 200 days. By contrast, Bangladesh’s limited buffer has declined in recent years. Despite significant subsidies in the energy sector, the absence of a sustainable stockpile and required refining capacity highlights a failure of long-term planning. Although establishing a strategic reserve would certainly require substantial initial investment, infrastructure development and institutional coordination, the costs are prudent expenditure rather than a fiscal burden. In an era of recurring geopolitical instability, resilience is built not through reactive measures but through anticipatory planning.
The authorities should, therefore, recognise the urgency of strategic energy reserve as part of a broader vision for energy security. Energy security cannot be compromised and strategic reserves are indispensable for achieving it. Diversifying energy sources and expanding renewable capacity are crucial, but without a reliable buffer, these efforts remain incomplete.
