Bangladesh’s energy subsidy bill is poised to exceed Tk19,000 crore this fiscal year, as a sharp spike in global liquefied natural gas (LNG) prices and supply disruptions threaten to strain public finances and power generation, officials have warned.
The crisis has been triggered by damage to Qatar’s Ras Laffan gas facilities—operated by QatarEnergy—following a reported Iranian attack last week. The disruption has curtailed LNG supplies from one of the world’s largest exporters, forcing Bangladesh to turn to volatile spot markets at significantly higher prices.
“We are preparing a draft to raise the subsidy to Tk19,000 crore considering LNG tariffs at $20 per MMBtu,” Petrobangla chairman Md Arfanul Hoque told Just Energy News. “However, tariffs have already crossed $25 per MMBtu after the attack, so the estimate may be revised further.”
Supply crunch and rising costs
Officials at Petrobangla said securing LNG cargoes from Qatar in the near term will be difficult. The state-run entity is now sourcing cargoes from the spot market through April, but expects procurement costs to climb further in the months ahead.
Before the crisis, each LNG cargo cost roughly Tk500 crore. That figure has now surged to about Tk1,300 crore, according to Petrobangla estimates.
The government has already disbursed Tk4,000 crore in subsidies this year, with officials projecting a further Tk15,000 crore requirement. This far exceeds the Tk6,000 crore originally allocated for LNG subsidies in the FY2025–26 budget.
Petrobangla has also requested a total allocation of Tk24,000 crore to manage the mounting pressure.
Power generation under strain
The impact is already being felt in the electricity sector. According to Bangladesh Power Development Board chairman Rezaul Karim, gas-fired generation has dropped sharply due to supply shortages.
“Gas-fired output has fallen to around 4,500MW, against an installed capacity of 12,204MW,” he said. Average gas supply has declined to 820 million cubic feet per day (mmcfd), down from 1,012 mmcfd a year earlier.
Coal-fired plants are partially offsetting the deficit, currently producing about 4,700MW, up from 3,200–3,500MW during the same period last year.
Even so, officials warn that up to 800MW of load-shedding may be required if gas supply falls short by around 1,000 mmcfd.
Pressure in Boro Paddy Irrigation
The crisis comes at a critical time, as the government seeks to ensure uninterrupted electricity supply for the country’s crutial Boro irrigation season. Authorities say subsidy increases will be necessary to support irrigation demand and stabilise rural power supply.
Petrobangla currently prioritises about 60% of natural gas for power generation and has assured that supply will remain stable through April. However, beyond that, uncertainty looms.
Rationing and domestic production
To cope with the crisis, the goivernment has already begun limited gas rationing, diverting around 50 mmcfd from the power sector and adjusting supply across consumer categories. Officials indicated that broader austerity measures and coordinated rationing could follow if global conditions worsen.
At the same time, efforts are underway to boost domestic gas output. Petrobangla recently added 8 mmcfd from a new well in Cumilla, with another 10 mmcfd expected soon from Biyanibazar.
While these additions may ease pressure marginally, officials acknowledge that Bangladesh will remain heavily dependent on imported LNG in the near term—leaving its energy security exposed to global shocks.