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Is the LNG pathway sustainable for Bangladesh?
created Dec 28th 2025, 05:45 by Lucifersgreen1
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The combination of soaring natural gas demand and plummeting domestic production has pushed the Bangladesh government to diversify its energy sources. In the past, various plans, including the Integrated Energy and Power Master Plan 2023, have attempted to address this concern, but they have driven a shift towards imported liquefied natural gas (LNG) instead. As a result, the LNG pathway, pursued as a fuel diversification strategy without enough investment in domestic gas exploration, has become an economic burden for the country.
With surging LNG imports, the government has drastically increased gas tariffs, making industrial production expensive. Yet, the government pays a hefty annual subsidy on account of LNG imports. Unless Bangladesh streamlines its energy pathway, the reliance on imported LNG may further expose the vulnerability of its energy system, leading to a recurring subsidy problem.
Bangladesh's LNG imports surged by 21.7 percent and 13.86 percent in FY2023-24 and FY2024-25, respectively, following a 15.45 percent reduction in FY2022-23. The country's LNG imports declined in FY2022-23 due to elevated spot market prices and tight fiscal conditions. Imports, however, rebounded in the subsequent years because of affordable LNG prices.
While the contribution of expensive LNG to total gas consumption stands at 28.8 percent, the government is gradually passing the additional costs on to different sectors, excluding grid-based power generation. Between February 2023 and April 2025, the government raised gas tariffs for industrial production twice and captive power generation thrice. The gas price for industrial production increased from Tk 16/ cubic metre (m3) ($0.13/m3) to Tk 40/m3 ($0.33/m3), while the gas price for captive power generation soared to Tk 42/m3 ($0.33/m3) from the same level.
As Bangladesh is yet to lock in a very high LNG dependence, the best course of action for the country is to design an alternative energy pathway, focusing on utilising renewable energy and local gas. There are two concrete examples. In 2020, Vietnam installed more than nine gigawatts (GW) of rooftop solar capacity, backed by a guaranteed feed-in-tariff. Pakistan imported solar panels and battery packs of 17GW and 1.25 gigawatt-hours (GWh) capacities in 2024, leading to a solar boom amid the country's energy supply crunch and unaffordable power tariffs. This surge in solar power generation resulted in a subdued demand for LNG in Pakistan.
The key to Bangladesh's success in enhancing energy system resilience is to expand renewable energy at a faster rate by focusing on decentralised systems like rooftop solar. Meanwhile, the government can allocate sufficient budgetary resources to explore local gas and strengthen energy efficiency to wean itself off its LNG reliance.
With surging LNG imports, the government has drastically increased gas tariffs, making industrial production expensive. Yet, the government pays a hefty annual subsidy on account of LNG imports. Unless Bangladesh streamlines its energy pathway, the reliance on imported LNG may further expose the vulnerability of its energy system, leading to a recurring subsidy problem.
Bangladesh's LNG imports surged by 21.7 percent and 13.86 percent in FY2023-24 and FY2024-25, respectively, following a 15.45 percent reduction in FY2022-23. The country's LNG imports declined in FY2022-23 due to elevated spot market prices and tight fiscal conditions. Imports, however, rebounded in the subsequent years because of affordable LNG prices.
While the contribution of expensive LNG to total gas consumption stands at 28.8 percent, the government is gradually passing the additional costs on to different sectors, excluding grid-based power generation. Between February 2023 and April 2025, the government raised gas tariffs for industrial production twice and captive power generation thrice. The gas price for industrial production increased from Tk 16/ cubic metre (m3) ($0.13/m3) to Tk 40/m3 ($0.33/m3), while the gas price for captive power generation soared to Tk 42/m3 ($0.33/m3) from the same level.
As Bangladesh is yet to lock in a very high LNG dependence, the best course of action for the country is to design an alternative energy pathway, focusing on utilising renewable energy and local gas. There are two concrete examples. In 2020, Vietnam installed more than nine gigawatts (GW) of rooftop solar capacity, backed by a guaranteed feed-in-tariff. Pakistan imported solar panels and battery packs of 17GW and 1.25 gigawatt-hours (GWh) capacities in 2024, leading to a solar boom amid the country's energy supply crunch and unaffordable power tariffs. This surge in solar power generation resulted in a subdued demand for LNG in Pakistan.
The key to Bangladesh's success in enhancing energy system resilience is to expand renewable energy at a faster rate by focusing on decentralised systems like rooftop solar. Meanwhile, the government can allocate sufficient budgetary resources to explore local gas and strengthen energy efficiency to wean itself off its LNG reliance.
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