$4.8b energy bill shock looms
Bangladesh is likely to face a significant increase in its annual fossil fuel import bill, with projections suggesting an additional $4.8 billion in costs — around 40 per cent higher than 2025 levels — due to the ongoing conflict in the Middle East, according to a new analysis by Zero Carbon Analytics (ZCA).
If global energy prices remain elevated over the next year, the added cost of importing oil, gas and coal could amount to roughly 1.1 per cent of Bangladesh’s 2024 gross domestic product.
Government data shows the country already spends about $12 billion annually on energy imports, underscoring the scale of the potential burden.
ZCA analysts said the current situation reflects patterns seen during previous global energy shocks, particularly after Russia’s invasion of Ukraine, which exposed Bangladesh’s heavy dependence on imported fossil fuels and the slow pace of its energy transition.
The earlier crisis led to a sharp rise in LNG prices and widespread power shortages, with prolonged blackouts affecting millions of people in 2022. Although the economy stabilised by 2025, the latest developments could trigger renewed pressure.
The projected rise in energy import costs is expected to strain foreign exchange reserves, potentially reducing import cover from 5.7 months to around 4.9 months.
Analysts warn that sustained pressure could weaken the taka, push up inflation and prompt tighter monetary measures by the central bank.
Bangladesh’s vulnerability stems largely from its growing reliance on imported energy.
Imports accounted for 46 per cent of total energy supply in 2023 and about 65 per cent of power generation requirements in the 2024–25 fiscal year.
A substantial share of these imports moves through the Strait of Hormuz, which is currently facing disruption due to regional tensions.
The country imports around 1.4 million tonnes of crude oil annually under long-term agreements with Gulf suppliers, but delays in shipments have already been reported.
Supply pressures are becoming evident, with Bangladesh Petroleum Corporation (BPC) confirming delays and cancellations in part of its planned diesel imports for March.
At the same time, Qatar, Bangladesh’s main LNG supplier, has suspended some production and shipments, adding to concerns over fuel availability.
Petrobangla officials have also indicated uncertainty over LNG cargoes scheduled for April, most of which transit through the affected region.
The impact is beginning to show in power generation, with industry sources indicating that nearly one-quarter of the country’s power plants are currently idle due to gas shortages.
The disruption is spreading to key sectors, with fertiliser production affected and the garment industry facing frequent power interruptions and limited diesel supplies for backup generation.
Despite these risks, progress in renewable energy development remains slow. Bangladesh needs to add around 760 MW of renewable capacity each year to meet its 2030 targets, but only 358 MW was under construction as of early 2026.
The share of renewables in the overall energy mix has remained largely unchanged at about 2 per cent in recent years.
Meanwhile, the government is continuing with plans to develop 41 LNG-based power plants with a combined capacity of 35 GW, requiring an estimated $50 billion in investment—further increasing dependence on imported fuel.
Energy experts say that resources currently spent managing volatile fossil fuel prices could be redirected towards renewable energy expansion to reduce exposure to global market shocks.
Short-term policy measures, such as lowering import duties on solar equipment, could accelerate rooftop solar adoption and ease pressure on fuel imports.
Analysts note that a 1 MW rooftop solar installation could save approximately $180,000 annually in fuel import costs while strengthening energy security and reducing vulnerability to international price fluctuations.
