Bangladesh’s power and energy sector is approaching a decisive moment.
After more than a decade of rapid electrification and capacity expansion, the country is now grappling with acute gas shortages, rising subsidies, mounting foreign exchange pressure and growing dependence on imported fuels.
While installed power capacity has expanded far beyond demand, shortages of primary energy, particularly natural gas, have exposed deep structural weaknesses in policy planning and execution.
To understand how Bangladesh arrived at this crossroads and what must be done to secure its energy future, Just Energy News Editor Md Shamim Jahangir spoke with Professor Ijaz Hossain, one of the country’s most respected energy thinkers.
A former academic at Bangladesh University of Engineering and Technology (BUET) with more than four decades of teaching and research experience, Professor Hossain has long advocated evidence-based energy policy, prudent gas management and a strategic transition to renewable energy.
In this wide-ranging interview, he offers a candid assessment of past policy failures, warns of a looming gas crisis by 2030, and outlines a pragmatic roadmap for building a more secure and sustainable energy system.
Evaluating 15 years of policy choices
Just Energy News: Professor Hossain, how do you evaluate the current state of Bangladesh’s power and energy sector, particularly in light of policy choices over the past 15 years?
Prof Ijaz Hossain: The situation is deeply troubling, especially in the gas sector. While the power sector has its own challenges, gas is where the crisis truly lies. Over the past 15 years, policy decisions, often driven by short-term political considerations, have left the entire energy system extremely vulnerable.
Industries are unable to operate at full capacity. Even when industrialists are willing to pay higher prices for uninterrupted gas supply, the system simply lacks the ability to deliver. Moreover, two major incidents linked to negligence over the past decade and a half have significantly depleted domestic gas reserves.
As a result, Bangladesh has become increasingly dependent on imported LNG, which places immense pressure on foreign exchange reserves and weakens energy security.
Ironically, while gas is in short supply, the power sector is burdened by overcapacity. Peak electricity demand stands at around 15,000-16,000 megawatts, yet installed capacity exceeds 30,000 megawatts. This surplus, nearly 70% above actual demand, has created a heavy financial burden through capacity payments, ultimately pushing up electricity prices. These structural imbalances are now weighing heavily on the economy.
A looming gas crisis by 2030
Just Energy News: You have warned of a dangerous situation by 2030. Why?
Prof Ijaz Hossain: Domestic gas reserves are declining steadily because we failed to invest adequately in exploration and proper reserve management. As local production falls, reliance on LNG imports will only increase.
If global LNG prices remain stable, the situation may remain manageable. But the Russia-Ukraine war demonstrated just how volatile the LNG market can be. A sudden spike in prices would severely damage Bangladesh’s economy.
The way forward rests on three pillars: intensified exploration to assess remaining reserves, LNG imports at tolerable prices, and rapid integration of renewable energy. Energy efficiency must underpin all of this, reducing demand is just as important as increasing supply.
Why reserve management matters
Just Energy News: You often emphasise reserve management. Why is it so critical?
Prof Ijaz Hossain: Reserve management is fundamental. Without credible reserve data, foreign investors will not commit. For years, we have pointed out that Petrobangla lacks the technical capacity for effective reserve management.
What is needed is a dedicated reserve management cell staffed with international experts. Chevron’s success at Bibiyana shows what professional reservoir management can achieve.
At the same time, the 50-well and 100-well drilling programmes must be accelerated with proper funding. BAPEX has demonstrated strong capability in onshore exploration, but in technically complex areas, such as the hill tracts, it should collaborate with experienced foreign specialists.
Deep offshore exploration remains our biggest hope. After resolving maritime disputes with Myanmar, Bangladesh gained access to deep offshore blocks. Yet progress has stalled repeatedly. Despite offering attractive terms, recent bidding rounds failed, largely due to political uncertainty and lack of investor confidence.
Within the next five years, we must either discover substantial gas reserves or conclusively establish that they do not exist. Only then can we plan realistically for the future.
Managing gas scarcity: Setting priorities
Just Energy News: How should gas be allocated during the current crisis?
Prof Ijaz Hossain: Gas allocation must prioritise economic productivity. Industries that generate employment, exports and growth should receive priority. Domestic consumption, while important, does not directly contribute to economic output.
Using gas-generated electricity primarily for household consumption is inefficient. Pricing, allocation and utilisation must be rationalised. Unproductive use should be discouraged through appropriate pricing and efficiency standards.
Tackling pilferage and system loss
Just Energy News: Gas pilferage reportedly costs billions of taka each year. How can this be addressed?
Prof Ijaz Hossain: Pilferage is now completely indefensible. This is no longer cheap domestic gas — it is imported LNG costing $10-12 per unit. System losses should not exceed two percent, yet losses of eight to ten percent are being reported.
The interim government must act decisively. Advanced metering, SCADA systems and strict enforcement are essential. Failure to control theft could ultimately force cuts in domestic gas supply.
Power sector subsidies and tariffs
Just Energy News: How do you assess the power sector under the interim government?
Prof Ijaz Hossain: Unfortunately, subsidies have increased rather than declined. Ideally, the government should have capped subsidies at earlier levels. Instead, pressure from the IMF is now pushing tariff hikes, which place a heavy burden on consumers.
Oil-based power plants are a major contributor to high generation costs. Phasing them out over the next five years could reduce electricity tariffs by Tk4-5 per unit. Expanding renewable energy could save $500 million to $1 billion annually, significantly easing the subsidy burden.
Can consumers bear higher prices?
Just Energy News: Can consumers absorb further tariff hikes?
Prof Ijaz Hossain: A gradual increase of around Tk2 over three years is manageable. A sudden increase of Tk4-5 would likely provoke public backlash. Tariff adjustments must be gradual, predictable and transparent.
Who should pay more?
Just Energy News: Which consumers should bear a greater share of the burden?
Prof Ijaz Hossain: Lifeline tariffs have served an important purpose, but they cannot remain indefinitely. Artificially low prices encourage waste. Many rural consumers can increasingly rely on rooftop solar, reducing pressure on the grid and enabling a more rational pricing structure.