Ke eping fuel prices unchanged despite mounting losses is becoming increasingly dif?cult to justify. The government is reportedly losing around Tk 167 crore per day from fuel sales, reversing what had once been a pro?table position. With more than 35 years of experience ?nancing power and energy sector entities at home and abroad, this kind of prolonged loss is unlikely to be sustainable. Without timely price adjustments, the burden on the broader economy will only grow heavier. Mamun Rashid, chairman of Financial Excellence Limited, shared this view in an interview with Energy and Power Editor Mollah Amzad Hossain. He suggested that while some limited subsidy on diesel may still be necessary, the higher costs of petrol and octane should be passed on to consumers to ease the ?scal pressure. Bangladesh’s dependence on imported power and energy has reached 56% and continues to rise. Last year, the country spent around $20 billion on energy imports and related debt servicing.
this year, it was expected to rise to $24 billion, but the Middle East war has disrupted everything. How severe could the crisis become for Bangladesh, and what should be done to keep it manageable? Due to high import dependence, Bangladesh is under signi?cant pressure. Because of the war, energy import costs could increase by $4-5 billion or more.
under these circumstances, there is no room to keep domestic fuel prices unchanged. While diesel prices may not be fully adjusted due to reasons acceptable, there is no alternative but to adjust prices for petrol, octane, and other fuels.
another major challenge is ensuring a suf?cient supply of fuel and LNG. Bangladesh imports about 1.5 million tonnes of crude oil annually, mainly from Saudi Arabia and partly from the UAE, but those supplies are now disrupted.
alternative sources must be explored to keep the Eastern Re?nery operational, though constrained by limited capacity. However, more than 70% of re?ned fuel, especially diesel, is imported from the Far East and Asian countries.
efforts should be made to increase supply from these sources.
about 75% of Bangladesh’s LNG imports depend on Qatar, which is now largely disrupted.
therefore, alongside the spot market, Bangladesh should initiate longterm LNG purchase negotiations with the United States and may be few others.
in the long run, the responsibility for fuel import and distribution should gradually be handed over to the private sector, allowing them to ensure supply based on global market prices. Most importantly, to reduce import dependence, foreign investment in oil and gas exploration should also be accelerated. Political decisions should also be taken immediately to explore, extract, and utilize domestic coal. Following the US-Israel attack on Iran and the spread of war in the Middle East, Bangladesh experienced fuel shortages within the ?rst week.
the government introduced rationing but later withdrew it. Despite various measures, the crisis persists, with people waiting hours in queues at fuel stations. Diesel shortages are affecting irrigation and transport.
the government claims there is no fuel crisis-why are people not convinced? After the war began, public panic about fuel shortages spread quickly. Media reports on limited reserves also contributed to this, and the government’s rationing decision further intensi?ed the situation.
that was a mistake, and it is good that it was withdrawn.
additionally, key positions in fuel import and distribution organizations were ?lled by individuals appointed during the interim government.
they may be honest, but their ef?ciency was questionable.
the current political leadership is mostly relying on them to manage supply and distribution, which may fail to ensure effective results.
although the government claims there is no shortage, people are not convinced because the system(including communication) has failed to demonstrate that effectively.
as a result, queues at fuel stations continue to grow longer.
one month into the war, around 40 energy facilities in nine Middle Eastern countries have been damaged.
the Strait of Hormuz is closed, and now the Houthis have joined the con?ict, raising concerns about disruptions at Bab ElMandeb.
this could disrupt up to 32% of global energy transportation. What is your view? It is uncertain when the war will end, how long its effects will last, or how quickly damaged energy infrastructure can return to full operation. But our energy needs will remain, if not further increase.
therefore, there is no alternative to ?nding new sources. Bangladesh should start negotiations with countries like the United States, Australia, Vietnam, and Indonesia for LNG.
at the same time, Bangladesh already imports re?ned fuel from Malaysia, Indonesia, Singapore, and India (also some from the Philippines in the past).
efforts should be made to increase supply from these countries. Discussions could also be initiated with China. For crude oil, Bangladesh must look beyond the Middle East and identify alternative suppliers. Since the duration and long-term impact of the crisis are uncertain, diversifying supply sources is essential.
the government has said it will not raise fuel prices for now.
the state minister for Energy has stated that the government is losing Tk 167 crore per day from fuel sales-about Tk 5,010 crore per month.
according to the pricing formula, fuel prices were supposed to be adjusted from April 1. How justi?ed is the decision not to increase prices? I do not think the decision to keep domestic fuel prices unchanged, despite rising global prices, is appropriate.
the government should reassess and adjust prices from April 1 as per the existing mechanism. While the full cost increase may not need to be passed on to consumers for diesel and kerosene, petrol and octane prices should re?ect the full adjustment.
otherwise, how will the losses be ?nanced? The Bangladesh Petroleum Corporation has made pro?ts of around Tk 20,000 crore over the past few years, but if prices are not adjusted, it could fall into losses within 4-5 months. At the same time, the government’s ability to provide subsidies is limited, especially with a revenue shortfall of about Tk 60,000 crore in the ?rst eight months of the current ?scal year. Moreover, adjusting fuel prices is also tied to conditions set by the International Monetary Fund for loan disbursements. While such adjustments may temporarily increase in?ation, they are necessary for long-term economic management.
the government is trying to secure $2 billion in loans from development partners to cover higher fuel import costs. Can borrowing alone manage the price shock? The Asian Development Bank has announced ?nancial support for member countries to cope with energy price volatility caused by the Middle East con?ict. However, I don’t think similar support will be readily available from the World Bank or the IMF speci?cally for fuel imports, other than budgetary support.
the key question is whether loans should be used only for energy imports. Bangladesh also needs budgetary support in other sectors.
therefore, increasing domestic revenue collection is essential-there is no alternative. Bangladesh imports 30-35% of its gas as LNG, with about 75% coming from Qatar. Due to attacks on Ras Laffan, LNG facilities there have shut down, and supply contracts have been suspended under force majeure. What should be done? Relying on a single source for LNG- especially under long-term contracts- was a ?awed strategy.
even deals with Oman and Excelerate Energy are ultimately linked to the Qatari supply. During the interim government period, a long-term LNG contract with Summit Group was canceled.
if their supply source is outside Qatar, the current government should reconsider that agreement.
also, negotiations for importing RLNG via pipeline from India were previously suspended.
the government could restart talks with India’s H-Energy and Bangladesh’s Saudi-Bangla Pipeline Company to diversify supply sources and strengthen energy security. Countries like Japan are increasing coal use due to high oil and LNG prices. What should Bangladesh do? Should it move toward domestic coal extraction? For Bangladesh, ensuring a reliable energy supply is critical for both services and industrial growth. With ambitious employment targets, energy security becomes even more important.
at this stage, Bangladesh cannot afford to prioritize the debate between clean and ‘dirty’ energy over supply security. A political decision should be taken immediately to explore, extract, and utilize domestic coal.
experts can then determine the most environmentally sustainable and economically viable methods for extraction. What steps should Bangladesh take to quickly attract foreign investment for gas exploration? Bangladesh is one of the least explored countries in the region in terms of oil and gas. We need a wartime-level approach for exploration. Relying solely on Petrobangla and BAPEX is not enough.
to accelerate investment, the government can adopt a governmentto-government (G2G) approach.
alternatively, it should quickly ?nalize a new strategy, negotiate with international oil and gas companies, and sign production sharing contracts (PSCs).
exploration drilling should begin within a year.
otherwise, the country’s energy crisis will deepen further