05/10/2026
Bangladesh’s LNG dream, a $30 billion risk
Ashraful Islam Raana
Bangladesh’s energy planning has created an uncomfortable contradiction. A country struggling to afford its current LNG imports is planning to more than double its import capacity within the next two years. The question is not whether Bangladesh needs LNG, but whether it can afford such large quantities.
Is the government creating another LNG trap of excess capacity, similar to the one in the power sector? People are already bearing the costs of capacity payments, loan interest and fuel imports, while high energy prices are pushing up the cost of living. Yet households and industries continue to face unreliable energy supplies.
The government is also under severe financial pressure. Borrowing is rising to cover power-sector costs, while state-owned Petrobangla and the Power Development Board (PDB) are burdened by subsidies. Before placing another massive financial burden on the public, the government must conduct a rigorous assessment of the economic costs and benefits of expanding LNG infrastructure.
One-Third of the National Budget Could Go Towards LNG Imports
Bangladesh currently has two floating LNG terminals with a combined capacity of 1,100 million cubic feet per day (mmcfd). The government plans to add three more by 2029, increasing total capacity to 2,700 mmcfd. The stated aim is to address gas shortages and ensure supplies to industries.
The argument appears reasonable, domestic gas reserves are declining, industries face shortages, and gas-fired power plants cannot operate at full capacity. But the ability to import gas is not the same as being able to afford it.
Following the Iran war, Bangladesh had to buy LNG from the spot market at around $29–30 per million British thermal units (MMBtu), echoing the price volatility seen after Russia’s invasion of Ukraine in 2022. These events show how geopolitical conflicts can disrupt energy markets, making it difficult to predict future prices.
If the planned terminals become operational, Bangladesh’s LNG import capacity will reach 2,700 mmcfd by 2029.
If projects of this scale are developed, Bangladesh could face an annual LNG import bill of around $29 billion during a global crisis similar to the wars in Iran or Ukraine, assuming LNG prices remain at the current average of $28 per MMBtu. If prices rise to $30 per MMBtu, the annual bill could reach approximately $30 billion.
Predicting global energy prices with complete accuracy is virtually impossible, as they are heavily influenced by geopolitical crises and supply-chain disruptions. For instance, Bloomberg’s Global LNG Market Outlook 2030, published in September 2025, projected that the average global LNG price would remain below $10 per MMBtu in 2026.
However, Bangladesh is currently paying around $28–30 per MMBtu for LNG. When Bloomberg published its forecast, the war involving Iran had not begun, and the Strait of Hormuz had not been closed. Bloomberg’s failure to anticipate these developments should not be viewed as a forecasting failure; geopolitical crises of this nature are extremely difficult to predict.
The report also projected that global LNG supply would increase by 2030, potentially pushing prices below $5 per MMBtu. However, such projections cannot guarantee future prices, particularly when geopolitical risks and potential supply disruptions remain uncertain.
The key concern is that if Bangladesh builds the capacity to import and supply 2,700 million cubic feet of LNG per day, it must also consider the financial risks of doing so. During a global crisis, the country could face an annual LNG import bill of around $29 billion, or potentially more if prices rise further.
Bangladesh’s total national budget for 2026–27 is Tk9.38 trillion. At $28 per MMBtu, annual LNG import costs could exceed Tk350,000 crore at the current exchange rate—more than one-third of the national budget. Any further depreciation of the taka would raise the cost further.
Limited Foreign Currency Earnings, but Plans for Massive Spending
According to Bangladesh Bank Bangladesh earns around $80 billion in foreign currency annually. In the 2025–26 fiscal year, earnings stood at $83.5 billion. An annual LNG bill of around $30 billion would place immense pressure on foreign exchange reserves and management.
The country must also import food, fertiliser, edible oil, industrial raw materials, machinery, pharmaceutical ingredients and other forms of energy. Its foreign currency earnings are heavily dependent on the ready-made garment sector and remittances, both of which face uncertainty amid global crises.
Bangladesh already spends around $12 billion annually on oil, gas and coal imports. Its trade deficit exceeded $27 billion in 2025–26. The issue is therefore not just energy security, but also foreign exchange security. Spending such a large share of the country’s foreign currency on LNG raises serious questions about affordability.
While increased energy supplies could boost exports, Bangladesh’s export base remains poorly diversified and heavily reliant on low-value-added garments. High energy costs could therefore erode the sector’s competitiveness rather than increase earnings, putting more factories at risk of closure. Most factories also cannot afford the higher gas prices that would result from withdrawing subsidies. Without diversifying its export base, Bangladesh cannot assume that expanding energy supplies at higher costs will translate into higher export earnings.
Lower Prices Will Not Eliminate the Problem
LNG prices will not remain at $28–30 per MMBtu indefinitely, so long-term decisions should not be based solely on prices driven by current conflicts.
But even if prices fall to $10 per MMBtu, importing LNG equivalent to 2,700 mmcfd would cost more than $10 billion annually. For an economy with a narrow export base, this would still be a substantial burden, competing with the need to pay for essential imports and debt repayments. LNG at $28 would be prohibitively expensive for Bangladesh. But even at $10, it would not be cheap.
The High Cost of LNG Terminals and Capacity Charge
Depending on their capacity, individual LNG terminals can cost between Tk5,000 crore and Tk11,000 crore to build. US-based Excelerate Energy constructed Bangladesh’s first LNG terminal in 2016–17 at a cost of around $180 million, or Tk2,214 crore at the time.
Petrobangla pays Tk2.9 crore a day in capacity charges for the terminal, amounting to around Tk1,064 crore annually. Over its 15-year contract, these payments will total approximately Tk16,000 crore.
Using this terminal as a reference, constructing three additional terminals could cost at least Tk10,000 crore each on average. Their capacity payments could reach around Tk50,000 crore, or $4 billion. Including costs associated with all five terminals, the total could rise to approximately Tk75,000 crore, or $7 billion.
There are also concerns over the proposed rental charge for a third LNG terminal, approved for a Chinese company. The proposed daily charge is $342,000, equivalent to Tk4.2062 crore—around 40 per cent higher than the rates for the existing terminals. If approved without changes, this could significantly increase capacity-payment obligations.
The Risk of Stranded Assets
Bangladesh could complete these terminals but later struggle to import enough LNG because of high prices, global market volatility or foreign currency shortages. Yet rental payments, loans and interest obligations would remain.
The power and energy sector offers a cautionary example. Many power plants remain idle, but Bangladesh pays more than Tk25,000 crore annually on average in capacity charges. In 2025 alone, these payments exceeded Tk42,000 crore.
New LNG terminals must therefore be assessed not only by how much gas they can supply, but also by how many dollars they will require over their contract periods and whether Bangladesh can afford to use them.
Bangladesh’s public debt exceeded Tk22 lakh crore in early 2026 and is increasing by around Tk1.5 lakh crore annually. Interest payments are also rising. Borrowing to finance expensive energy imports and infrastructure risks creating a cycle in which efforts to secure energy undermine broader economic security.
The government is planning three new LNG terminals while expanding domestic gas exploration through 150 wells. It has also launched programmes to achieve 10,000 MW of solar power generation by 2030. The key question is how these priorities will be balanced. If LNG imports take precedence over domestic gas and renewable energy, Bangladesh risks becoming increasingly dependent on imported fuel.
Conversely, if domestic gas exploration and renewable energy programmes succeed, expensive LNG infrastructure could be underused or become unnecessary, turning into stranded assets.
A recently published report by Zurich-based SolAbility, Global LNG Market Outlook 2026–2035, says that countries around the world are cancelling LNG projects as they expand renewable energy. This trend is particularly evident in Pakistan, Vietnam and the Philippines.
One of the key reasons is the high cost of electricity generated from LNG, which ranges from $80 to $120 per megawatt-hour (MWh). In comparison, generating the same amount of electricity using solar power and battery storage costs just $30 to $40 per MWh.
Before approving each new terminal, the government should publish transparent economic assessments based on LNG prices of $10, $20 and $30 per MMBtu. These should show the annual foreign currency requirements, potential sources of funding and capacity charges payable even when terminals are underutilised.
The government should also compare these costs with investments in domestic gas exploration, rehabilitation of ageing gas wells, transmission improvements, industrial energy efficiency, renewable electricity and the power grid. Such comparisons would help establish how much dependence on imported fuel could realistically be reduced.
The Government Has Changed, but How Much Has the Strategy Changed?
In 2023, the previous government finalised the Integrated Energy and Power Master Plan (IEPMP) with Japanese assistance. To address future gas shortages, it opened the way for LNG imports of up to 5,000 mmcfd by 2040. At current market prices, this volume could cost Bangladesh more than $60 billion annually. The plan also proposed $179 billion in energy infrastructure investment, including LNG terminals.
Some experts have argued that Japan’s commercial interests influenced the plan’s ambitions. Japan is a major LNG re-exporter and has invested heavily in LNG trading infrastructure and gas-fired power plants serving the Asian market.
Although the IEPMP lost relevance after the departure of the Awami League government, questions remain about how much the country’s fundamental energy strategy has changed. The new administration appears interested in pursuing several similar initiatives.
Bangladesh, facing a serious energy crisis, does need LNG imports in the short term. But LNG cannot be a permanent solution. If the country is struggling to secure 1,100 mmcfd today, how will it manage to secure 2,700 mmcfd within the next two years—and, more importantly, afford it?
The main article published at The Daily Star. Link in comment..........
