Energy sourcing at risk under US agreement

A recently signed reciprocal trade agreement with the United States may significantly constrain Bangladesh’s energy sourcing, experts have warned.

Debapriya Bhattacharya, convener of the Citizen’s Platform for SDGs, said the deal restricts Dhaka’s ability to trade with countries under US sanctions and labels several nations as “non-market” economies, limiting flexibility in securing energy during crises.

Speaking at a media briefing in Dhaka on the government’s first budget, organised by the Centre for Policy Dialogue (CPD) on Tuesday, Debapriya highlighted that under the agreement, Bangladesh would require a formal US waiver to import cheaper Russian oil. This could reduce the country’s options in diversifying energy sources.

“These legal constraints mean Bangladesh must navigate complex approval processes to engage with alternative energy suppliers, potentially
increasing costs and reducing supply flexibility,” he said.

Debapriya, also a distinguished fellow at CPD, warned that the agreement could complicate economic engagement with countries such as China and Russia.

He noted that foreign policy is increasingly intertwined with economic decisions, introducing geopolitical limitations that could affect energy and trade strategies.

Bangladesh is currently seeking US approval to import 600,000 tonnes of oil from Russia, a move that illustrates the potential impact of these trade restrictions on the nation’s energy security.

The expert also highlighted the broader macroeconomic pressures facing the country.

Rising power subsidies, increasing energy import bills, and higher demand for US dollars to settle payments are placing significant strain on public finances.

According to Debapriya, energy costs alone are expected to increase by $4.8 billion annually, equivalent to roughly 1.1 percent of GDP, potentially widening external imbalances.

He added that the rising demand for dollars to pay for fuel imports could put further pressure on the taka, weakening the currency.

Regional instability could also affect remittance inflows, as nearly half of Bangladesh’s overseas remittances originate from Gulf countries.

Passing on higher fuel import costs to consumers could, in turn, drive inflation upward, further straining households and businesses already coping with rising living expenses.

The briefing underscored the need for careful planning in energy policy. Debapriya stressed that Bangladesh must balance compliance with international trade agreements while safeguarding domestic energy security and economic stability.

He called for strategic engagement with multiple energy suppliers and for contingency planning to mitigate potential disruptions caused by geopolitical and trade-related constraints.

Experts and analysts at the briefing also noted that the government may need to explore alternative financing mechanisms, strengthen domestic energy production, and enhance efficiency in power consumption to offset potential cost increases stemming from limited access to certain international energy markets.

With global energy markets increasingly volatile and geopolitical tensions affecting supply chains, Bangladesh’s ability to secure affordable and reliable energy imports could play a critical role in maintaining economic stability and sustaining growth.