Why Has Bangladesh’s Energy Crisis Deepened? The Real Reasons Behind the Power Shortage
Bangladesh’s energy crisis has deepened sharply in August 2026, with gas shortages disrupting electricity generation, factories, households and transport. In some areas, load-shedding has reached several hours a day, while the government has tightened electricity-saving measures, including earlier closing times for shops and markets.
The immediate trigger was the shutdown of a floating liquefied natural gas (LNG) terminal after a fire on July 21. But the deeper problem is structural: Bangladesh already had a significant gap between domestic gas supply and demand and has become increasingly dependent on imported LNG.
So, what exactly went wrong—and why has one LNG terminal problem created such a large nationwide energy shock?
1. The Immediate Trigger: An LNG Terminal Went Offline
The latest crisis intensified after a floating storage and regasification unit (FSRU) operated by US-based Excelerate Energy was shut following a July 21 fire.
The terminal normally contributes a substantial amount of gas to Bangladesh’s national grid. Its shutdown removed roughly 450 million cubic feet per day (mmcfd) of gas supply. That was a major hit for a country whose gas system was already operating below demand.
The problem quickly spread beyond the gas sector.
Gas-fired power plants had less fuel available, forcing electricity generation lower. Industries faced weaker gas pressure, CNG stations struggled to obtain adequate supplies and households in some areas also experienced gas shortages.
The terminal subsequently began a partial restart, restoring around 115 mmcfd initially. However, the recovery did not immediately eliminate the country's broader supply deficit.
2. Bangladesh Already Has a Gas Supply Problem
This is perhaps the most important part of the story.
The LNG terminal failure did not create Bangladesh’s energy vulnerability from scratch. It exposed how dependent the country's electricity system has become on a relatively tight gas supply chain.
Reuters reported that Bangladesh's normal gas demand is around 3,800–4,000 mmcfd, while available supply has been closer to 2,600 mmcfd in recent periods. Domestic gas production has been declining, increasing the country's dependence on imported LNG.
That means the system was already short of fuel before the terminal disruption.
When hundreds of millions of cubic feet of daily supply suddenly disappeared, there was little spare capacity available to absorb the shock.
This is why the crisis quickly became a nationwide electricity problem.
3. Gas Shortage Means Less Electricity
Bangladesh depends heavily on natural gas for power generation.
When gas supplies fall, power plants cannot necessarily operate at their normal capacity even if the generating equipment itself is available.
Recent reporting showed that gas-fired plants were receiving substantially less gas than their requirements. As a result, electricity generation fell while demand remained high.
The result has been widespread load-shedding.
Power Grid Bangladesh data cited by The Daily Star showed the electricity shortage rising dramatically in early August, with average hourly load-shedding reaching around 3,000 MW on August 9.
At one point, the reported shortfall exceeded 3,000 MW, putting significant pressure on the national grid.
For ordinary consumers, this translates into long periods without electricity.
For businesses, however, the consequences can be much more expensive.
4. Why Bangladesh Cannot Simply Replace Gas With Oil
A natural response to a gas shortage is to use more oil-fired generation.
Bangladesh has done exactly that.
But oil-fired electricity is significantly more expensive than gas-based generation.
According to bdnews24, oil-based generation accounted for around 16% of national electricity generation while consuming about 39% of power-sector expenditure. The publication reported an average oil-generation cost of Tk18.59 per kWh, compared with much lower costs for gas-based generation.
That creates a difficult choice.
Bangladesh can burn more furnace oil and diesel to reduce blackouts, but doing so raises the cost of electricity generation and increases pressure on the country's fuel-import bill.
Alternatively, it can conserve fuel and accept more load-shedding.
Neither option is attractive.
5. Global LNG and Geopolitical Disruptions Added More Pressure
Bangladesh's dependence on imported LNG makes it vulnerable not only to domestic production problems but also to international energy-market disruptions.
The wider Iran conflict has put additional pressure on global LNG and energy supply chains. Reuters reported that Bangladesh's LNG position was particularly vulnerable because of its reliance on imports at a time when the international market was already under strain.
This matters because Bangladesh cannot simply increase LNG purchases instantly whenever domestic production falls.
It needs available cargoes, suitable terminals, foreign currency, shipping capacity and affordable prices.
Any disruption in one of those links can affect the entire energy system.
6. The LNG Infrastructure Itself Is a Vulnerability
Bangladesh's reliance on floating LNG terminals has provided a relatively quick way to import gas, but it has also created a concentration risk.
The latest incident demonstrated this clearly.
When one FSRU stopped operating, hundreds of millions of cubic feet of daily gas supply disappeared almost immediately. The Daily Star described the situation as exposing the fragility of Bangladesh's LNG infrastructure, where technical problems, maintenance or severe weather can have national consequences.
The situation became more complicated in mid-August when LNG supply from the Summit terminal was temporarily suspended because of rough sea conditions, according to Jago News.
That illustrates the problem: Bangladesh needs not only more gas, but also a more resilient supply system.
7. Coal and Power-Plant Fuel Problems Made the Situation Worse
Gas is not the only problem.
Bangladesh's electricity system also relies on coal and oil-fired power plants. Recent reports indicated that coal-handling disruptions and fuel shortages affected some plants at the same time that gas supplies were constrained.
India's Adani Power supply also came under pressure during one recent period, with Bangladesh receiving significantly less electricity than usual from the plant because of coal-transport difficulties, according to local reporting.
That combination is particularly damaging.
If gas generation falls, the country needs coal, oil, imported electricity or other sources to compensate. But if several of those sources face constraints simultaneously, the electricity deficit can become very large.
8. Why the Crisis Is Hurting Factories
Bangladesh's energy shortage is no longer just an electricity-sector problem.
Factories have reported production disruptions because of low gas pressure and power outages. Some manufacturers have reportedly been forced to use diesel generators to keep production running, increasing operating costs.
This is particularly important for Bangladesh because its manufacturing and export sectors depend heavily on reliable energy.
Higher energy costs can reduce profit margins. Repeated shutdowns can delay orders. And if factories cannot meet delivery schedules, international buyers may look for alternative suppliers.
That makes the energy crisis an economic competitiveness issue.
9. Why Bangladesh Is Asking India for More Diesel
With gas supplies under pressure, diesel and other liquid fuels become more important as backup energy sources.
Bangladesh has therefore sought additional diesel supplies from India through the existing cross-border energy relationship.
India already supplies diesel to Bangladesh through the India-Bangladesh Friendship Pipeline, which operates commercially from India's Numaligarh refinery. Indian government sources have described the diesel trade as part of the ongoing energy relationship between the two countries.
However, additional diesel cannot completely solve Bangladesh's gas shortage.
Diesel can support transport, backup generators and some oil-fired power generation, but replacing a large volume of missing natural gas with liquid fuel would be expensive.
The diesel request is therefore better understood as a measure to reduce the immediate pressure, rather than a permanent solution to Bangladesh's underlying energy problem.
What Happens Next?
Bangladesh has already moved to purchase additional LNG cargoes as it attempts to stabilise supplies. The government approved the purchase of eight LNG cargoes and 5,000 tonnes of LPG during the recent energy crunch.
The most important near-term developments will be:
Full restoration of damaged LNG terminal capacity.
Stability of LNG imports and international prices.
Recovery in domestic gas supply.
Availability of coal and furnace oil for power plants.
Electricity imports from neighbouring countries.
The volume of additional diesel Bangladesh can secure from India.
Whether industrial gas supplies return to normal.
A temporary improvement in LNG availability could ease the immediate crisis. But the larger structural problem—declining domestic gas production combined with rising dependence on imported LNG—will remain.
The Real Root of Bangladesh’s Energy Crisis
The current crisis has a clear immediate cause, but its roots run deeper.
A damaged LNG terminal triggered the latest shock. Declining domestic gas production, insufficient supply relative to demand, dependence on imported LNG, fuel-import vulnerability and weaknesses across the power-generation system made the shock much worse.
That is why Bangladesh has experienced simultaneous pressure on electricity, gas, industry and transport.
For India, the situation also highlights the strategic value of its refining capacity, electricity exports and cross-border energy infrastructure. For investors, the key lesson is that energy shortages can quickly move from a commodity-market problem to a broader economic issue affecting industrial output, business costs and regional trade.
The next few weeks will show whether Bangladesh can stabilise gas supplies or whether the country will need to rely more heavily on expensive imported fuels and electricity.
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This article is for informational and educational purposes only and should not be considered investment advice
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