Key facts
- Bangladesh faces a severe fuel and energy crisis due to global market disruptions.
- The government is spending hundreds of millions of dollars monthly to mitigate price surges.
- The crisis is linked to the US war on Iran and disruptions in the Strait of Hormuz.
- LNG supplies were cut off after Iranian attacks disrupted production in the Persian Gulf.
- Spot LNG prices surged to $28.28 per MMBtu from $10 per MMBtu within weeks.
- Energy rationing includes early closures for shops and widespread power cuts.
Bangladesh is grappling with a severe fuel and energy crisis, forcing the government to spend hundreds of millions of dollars monthly to shield its citizens from surging prices. This crisis, exacerbated by global events including the US war on Iran and disruptions to the Strait of Hormuz, is testing the new government's reform agenda. Prime Minister Tarique Rahman, who took office on February 17, faces challenges in addressing economic issues like bad banks and workforce underemployment.
The crisis began in early March following Iranian attacks on energy infrastructure, which disrupted production and led QatarEnergy, a key LNG supplier, to suspend deliveries to Bangladesh. Other suppliers followed suit, cutting off contracted shipments. This resulted in a dramatic price increase for spot LNG, which soared to $28.28 per million British thermal units (MMBtu) in mid-March from $10 per MMBtu in January. The country struggled to secure alternative supplies, with initial tenders receiving no bids.
To conserve energy, the government has implemented rationing measures, including ordering shops and markets to close by 8pm and switching off illuminated billboards by 7pm. Power cuts have become severe, with rural areas experiencing up to 16 hours without electricity daily in August, and national load-shedding exceeding 3,000MW. The crisis has led to long queues at fuel stations and difficulties for commuters, with almost 3 million more people expected to face food insecurity by the end of the year.