The country began importing the super-chilled fuel in 2018 with long-term contracts with Qatar and Oman, as well as from the international spot market.

However, Shafiqul Alam, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said the plan had overestimated power demands, resulting in an excessive forecast for LNG imports which may not be required.

Costs of LNG

One of the main problems with relying on LNG imports is its price volatility, according to several energy experts.

Bangladesh had to suspend purchases of LNG from the spot market in July 2022 when prices skyrocketed in the wake of Russia’s war against Ukraine.

Warda Ajaz, a project manager at Global Energy Monitor, said last year’s LNG price hike led to very frequent power outages – known as load shedding, and a decrease in industrial output.

“This is the cost of dependency on imported fuel – and the recent energy crisis has provided many examples worldwide to reemphasise this,” she said.

The government recently resumed buying LNG after an eight-month pause, but simultaneously moved to raise energy and power prices and cut growing subsidies that stood at 273 billion taka (US$2.55 billion) in the 2022 financial year.

Such price adjustments have put pressure on businessmen such as textile entrepreneur Ahmed.

“The situation is even more dire for smaller local businesses that supply accessories to larger businesses, and have less financial clout to cope with the energy price hike,” he said.

Helen Mashiyat Preoty, a researcher for the Centre for Policy Dialogue (CPD), a Dhaka-based think-tank, said growing reliance on imported fuel will require substantial investment.

For example, the government has to compensate the two privately-owned offshore systems for storing and re-gasifying imported liquefied gas when they are forced to run below capacity due to shortages of LNG imports, she said.

The government is now eyeing the installation of two more privately-owned offshore units and an onshore LNG terminal, and the draft plan estimates that about half of the required investment for power generation will have to go to the gas sector.

Instead of leaning towards LNG imports, Bangladesh should ramp up natural gas exploration at home, some experts said.

Badrul Imam, a professor of geology at the University of Dhaka, said the country has not placed sufficient emphasis on exploring for gas in the last two decades despite the “high potential” of discovering more gas fields on land and at sea.

As a result, domestic gas output has reduced since 2016 – leading to increasing dependence on costly LNG imports, he said.

Clean energy transition

The energy plan’s reliance on imported fossil fuels is also at odds with Bangladesh’s policy priority to grow the share of clean energy in its power mix.

While natural gas is less polluting than coal or oil, gas is still a major driver of climate change. It is almost entirely methane – a greenhouse gas that is much more potent than carbon dioxide in the short term if it is released into the atmosphere.

In 2021, the Bangladesh government set a target to generate 40 per cent of its power from renewables, up from a previous aim of 30 per cent.

The nation’s renewable energy capacity stands at 967 megawatts (MW), which is just over 3.7 per cent of total installed power generation capacity.

To attain the 40 per cent target, the draft plan includes options such as boosting use of nuclear power, carbon capture and storage technology and ammonia and hydrogen technologies.

But Shahriar Ahmed Chowdhury, director of the Centre for Energy Research at United International University, said many of those technologies are at the early stages of development.

Instead of exploring untested technologies, the plan should work out clearer strategies for proven clean energy sources such as solar power, experts said.

Alam from the IEEFA said Bangladesh could immediately implement about 12,500 MW of renewable power by deploying solar power on rooftops and other available areas without taking up any agricultural land in the space-starved country.

Such renewable investment could also save a substantial amount of spending on fuel imports, according to analysts.

A recent study by three energy think-tanks said solar generation in seven Asian nations – China, India, Japan, South Korea, Vietnam, the Philippines and Thailand – had helped them save potential fossil fuel expenditure worth US$34 billion in the first half of 2022, equal to 9 per cent of their fossil fuel costs.

Alam said Bangladesh could save about US$1.1 billion on fuel import costs annually by installing 2,000 MW of solar power and replacing diesel-run irrigation with solar-powered systems.

In a 2021 climate plan, the government said transitioning from fossil-fuel dependency to a low-carbon model focused on renewables and energy efficiency could create up to 55,000 new jobs between 2016 and 2030.

But growth of solar energy in Bangladesh, despite its potential, has been constrained by barriers like high tax rates.

Textile entrepreneur Ahmed said that installing solar power often still proved costly for businesses, with a tax of 37 per cent-58 per cent levied on rooftop solar technology components like inverters.

Alam of the IEEFA said that Bangladesh’s draft energy and power master plan is still a work in progress.

“The government could still incorporate changes to chart out better strategies for renewable energy,” he added.

This story was published with permission from Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit  

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