Key facts
- New industrial facilities in Bangladesh are idle due to energy shortages, impacting $750 million in investments.
- The energy crisis is linked to Middle East conflict and Bangladesh's heavy reliance on imported natural gas.
- Bangladesh is paying double for spot market LNG and experiencing power rationing and blackouts.
- Companies like Meghna Group and PRAN-RFL Group are increasing investments in solar power.
- The government has raised power rates by 17% and implemented austerity measures, contributing to inflation.
- Limited domestic gas infrastructure hinders efforts to tap local resources.
New industrial facilities in Bangladesh, intended to symbolize the nation's economic growth and shift to heavy industry, are currently idle due to a severe energy shortage. Machinery sits unused at a glass factory and a steel mill in the Cumilla economic zone, representing nearly $750 million in stranded investments by Meghna Group of Industries. Chairman Mostafa Kamal stated that these plants could have begun production if energy supplies were available, highlighting the painful impact of Middle East conflict on Bangladesh's economy.
Bangladesh's heavy dependence on energy from the Persian Gulf, particularly liquefied natural gas from Qatar, has made it vulnerable. Natural gas accounts for about two-thirds of the country's electricity generation, and approximately three-quarters of its LNG imports come from Qatar, a route now potentially affected by conflict. To compensate for contracted supply shortfalls, Bangladesh has increased purchases from the spot market at roughly double the usual price.
Despite these efforts, the country has experienced power rationing and blackouts, particularly in rural areas, while major cities like Dhaka have seen fewer disruptions. Two gas-fired power plants are offline due to fuel shortages, according to Minister Iqbal Hassan Mahmood. Companies are actively seeking solutions; PRAN-RFL Group's Chairman Ahsan Khan Chowdhury is prioritizing energy efficiency and plans to expand solar capacity fivefold to 200 megawatts. Meghna Group is also installing rooftop solar panels.
These moves reflect a broader push towards renewables driven by high fossil fuel costs. However, renewables alone cannot meet demand. Bangladesh is also looking to tap domestic gas resources from the Bhola field, but a lack of pipeline infrastructure poses a significant challenge. Meanwhile, the government has raised average retail power rates by 17% and implemented austerity measures, contributing to a 16-month high in inflation in May. Small business owners, like ice cream seller Habibur Rahman, are struggling with increased electricity costs that cannot be passed on to consumers.