Energy crisis, economic stress to take two years to ease

Says finance minister

Finance Minister Amir Khosru Mahmud Chowdhury expects the energy crisis and broader economic pressures facing Bangladesh to stabilise within two years, with a full economic recovery taking up to five years.

“It makes no sense to give people false hope by saying that we will solve all the problems tomorrow or the day after. We need at least two years,” Khosru said at a meeting of the Foreign Investors’ Chamber of Commerce and Industry (FICCI) in Dhaka yesterday.

“Under the government’s plan, the entire economy, including the energy sector, will be stabilised within the first two years. The economy will gain momentum in the third year and make a full recovery in the fourth and fifth years.”

Speaking at the meeting, titled “Sustainable Power and Energy: Driving Investment in Bangladesh”, Khosru said it would be wrong to offer people unrealistic expectations of a faster recovery.

He urged the private sector to prepare for stronger economic activity in the fourth and fifth years.

Khosru blamed the current economic strain on the previous Awami League government and the ongoing conflict in the Middle East.

“Within just a week of our taking office, a war broke out in the Middle East, leading to the energy crisis. Compounding this are the debts from the previous government and other liabilities we have inherited,” he said.

The finance minister said successive governments had not explored domestic gas resources for 15 years, making this a priority for the current government. Bangladesh Petroleum Exploration and Production Company Limited (Bapex) has been approved to drill 50 new wells, while production-sharing contracts (PSCs) are being finalised, he said.

Exploration will cover both onshore and offshore areas. The government has also set a target of generating at least 10 gigawatts of solar power and granted tax exemptions on solar power infrastructure, he added.

“We are planning to bring three to four new FSRUs [floating storage and regasification units] into operation to address the gas crisis, with South Korean, Chinese and American private investors involved.”

Outlining plans for new energy infrastructure, the finance minister said, “Alongside Matarbari, a new site with a 20-metre draft has been identified near Khulna. A modern terminal will be built there to allow oil and LNG to be unloaded directly from large vessels, creating an energy hub.”

Khosru said the government has managed the global energy crisis reasonably well, although there is room for improvement. The country has incurred $7 billion in out-of-pocket expenditure because of global pressures, he said.

He added that the government is addressing the challenges, although future pressures remain uncertain.

Logistics are also improving as the government opens ports to private-sector participation, which Khosru said will reduce costs and make doing business easier.

The government is also receiving a positive response to discussions on establishing an equity fund in Hong Kong specifically for Bangladesh, he said. The capital will go towards the energy sector, bank recapitalisation and state-owned enterprises (SOEs).

FICCI President Rupali Haque Chowdhury said disruptions in global energy markets have exposed Bangladesh’s vulnerability to imported fuels, raising industrial costs and disrupting production.

She stressed that energy security must go beyond managing supply to ensure reliability and affordability. She called for more domestic gas exploration, diversified liquefied natural gas (LNG) sourcing, modernised grid infrastructure, greater energy efficiency and faster investment in renewables.

She also stressed the need for regional energy cooperation and greater private-sector participation to build a resilient energy system, support export diversification and create jobs.

In the keynote address, Shafiqul Alam, lead analyst for Bangladesh Energy (South Asia) at the Institute for Energy Economics and Financial Analysis (IEEFA), said that domestic gas reserves could be depleted by 2036 without major new discoveries.

He said declining reserves and volatile global fuel prices are putting increasing pressure on power generation costs and industrial competitiveness.

Shafiqul proposed expanding rooftop solar, promoting solar-powered irrigation, improving industrial energy efficiency and pursuing regional hydropower cooperation to reduce dependence on imports. He also called for stable policies, green financing and public-private partnerships to attract sustained investment.

During a panel discussion, speakers highlighted the need for investment-friendly policies and a diversified energy mix to ensure reliable and affordable energy.

Shu Xiong, managing director of Chevron Bangladesh, said attracting foreign investment requires global competitiveness, predictable contracts, respect for contractual commitments and a sense of urgency backed by long-term planning.

Md Fazlul Hoque, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), outlined short and long-term measures to ease the ongoing energy crisis.

He said reopening coal-fired and furnace oil-fired power plants running below capacity could provide immediate relief. Securing coal and furnace oil supplies takes an estimated two to three weeks, but restoring the plants to full capacity could be a game-changer, he added.

Prof M Tamim, vice-chancellor of Independent University, Bangladesh, called for a pragmatic balance in the energy mix and urgent foreign direct investment in gas exploration to strengthen energy security.