Power and energy crisis in Bangladesh

Bangladesh is currently facing one of the most disruptive energy crises in recent months. Extended load shedding, acute gas shortages, and high fuel price hikes have severely impacted daily life and economic activity across the country. According to the national dailies, the industrial production has slowed, transport services have been disrupted, and businesses—especially small and medium enterprises—have reported financial losses and operational downtime. This crisis has exposed systemic weaknesses in Bangladesh’s energy system, including its heavy dependence on imported fuels, ageing grid infrastructure, and inadequate investment in domestic energy production and renewables. As demand continues to rise—driven by urbanisation, industrial expansion, and agricultural mechanisation—the country’s limited and inefficient energy supply has struggled to keep up. This report analyses the current power and energy crisis in Bangladesh with a focus on natural gas, electricity, and transportation fuels such as diesel and petrol. Drawing from secondary data, in-depth interviews, and sector-specific trends, it identifies the scale of the supply-demand gap, pricing trends, and its impact across key user groups: households, industries, and the transport sector.
Energy supply-demand gap analysis: Bangladesh’s energy system relies heavily on three major energy sources: natural gas, electricity, and transportation fuels (diesel and petrol). This section analyses the trends in demand and supply for each of these energy types using national data, highlighting the scale of the deficits and their sectoral implications.
Natural gas. Natural gas remains vital to Bangladesh’s energy system, powering over half of the electricity generation and playing key roles in industry, domestic use, and fertiliser production. However, the sector is under severe strain due to falling domestic production and growing demand. Between FY2020 and FY2024, total gas production declined from 24,993 to 21,075 mmcf, while distribution remained steady. As a result, the production-distribution gap widened significantly from 3,492 to 6,479 mmcf.
There is limited effort even under the Interim Government regime to explore natural gas from the probable gas wells onshore and offshore. 34 wells were targeted to be explored in FY2025, whereas only 8 wells were being explored as of October 2024. A part of the gap is partially met by imported LNG. The share of LNG has increased from 7.3 per cent in FY2020 to 25 per cent in Fy2025 (till January). Such a rise in the import of LNG has significantly raised the expenses. Hence, the financial state of Petrobangla increasingly turned out to be negative.
The sectoral consumption patterns show power and industry as the largest gas users. While power has remained the dominant sector, industrial use has steadily increased. Domestic consumption, by contrast, has fallen from 158 BCF in FY2018 to 100 BCF in FY2024. Total national gas use peaked at 1,041 BCF in FY2019 but declined to 916 BCF in FY2024.
Also, the future demand is expected to grow sharply from 3,965 mmcfd in FY2025 to 4,762 mmcfd in FY2028, driven by the power and industrial sectors. Domestic and commercial demand is projected to decline slightly, reflecting lower allocation priorities.
In other words, unless alternate energy sources (including renewable energy) are managed for major economic activities, the gas crisis will be further acute in the coming years. Overdependence on LNG would further weaken the financial state of Petro Bangla as well as weaken the overall BoP of the country.
In the price trend analysis, it has been found that gas prices increased significantly for industries and captive power from BDT 30 to BDT 40–42 per cubic meter, while electricity generation retained the subsidised rate of BDT 14 in 2025. Rising gas prices along with lowering supply have heavily affected the gas dependent industries such as textiles, glass, ceramic and steel industries.
Together, these trends reveal a deepening gas crisis. Without new exploration, infrastructure upgrades, and pricing reform, Bangladesh’s energy security and industrial growth will remain at risk.
Electricity. Electricity demand in Bangladesh has risen steadily, driven by urbanisation, industrial growth, and agricultural electrification. Despite achieving over 95 per cent national electrification by 2021, supply has not kept pace with demand due to limited fuel availability, ageing infrastructure, and inefficiencies in generation and distribution.
From FY2011 to FY2024, installed capacity increased from 7,264 MW to 28,098 MW. However, actual demand only rose to 16,477 MW, significantly below the forecasted 17,830 MW. The gap has widened in recent years, with “energy not served” peaking at 3,818 MkWh in FY2023.
These shortfalls are especially severe during peak hours and irrigation seasons. Rural areas face daily outages, while urban users rely increasingly on diesel generators, raising energy costs. Industries adjust production schedules to cope with load shedding, and SMEs without backup power face financial strain. In agriculture, unreliable power forces a shift to diesel pumps, increasing irrigation costs and affecting food prices.
Although the generation mix has diversified, over 43 per cent still comes from gas-fired plants, which remain vulnerable to supply disruptions. Financial stress on utilities, stemming from high subsidies and low-cost recovery, further limits investment in system upgrades.
On the other hand, electricity tariffs have also risen. Between 2021 and 2024, annual average growth rates for residential users (0–50 kWh) rose by 13.6 per cent, while other categories like shops and small industries saw increases of 6.5 per cent. These hikes have impacted affordability, especially for low- and middle-income users. This rise in electricity tariff has been carried out to lessen the huge loss of the BPDB over the years owing to faulty pricing for purchasing electricity from IPPs, capacity payment, creating excess generation capacity, etc. The consumers have to take the burden of these faulty activities.
Despite capacity growth, Bangladesh’s electricity sector continues to face a growing gap between demand and reliable supply, underscoring the need for fuel diversification, pricing reform, and investment in transmission and distribution.
Petroleum fuels. Petroleum fuels such as diesel, petrol, octane, and kerosene are central to Bangladesh’s transport, agriculture, and energy backup needs. Unlike electricity or natural gas, these fuels are entirely imported, making their availability and affordability sensitive to global price volatility and exchange rate fluctuations. Since mid-2022, international market shocks combined with domestic price adjustments have significantly impacted fuel consumption patterns across sectors.
Over the last five years, fuel consumption initially increased across all four fuel types but saw a notable decline in FY2024. Diesel, the most consumed fuel, dropped by 14 per cent, from 4.94 million metric tons in FY2023 to 4.24 million metric tons in FY2024. Petrol and octane also declined by 5.2 per cent and 2.1 per cent, respectively, while kerosene consumption fell by nearly 10 per cent. This reversal reflects both high domestic prices and weakened purchasing power, especially among low-income and informal sector users.
These consumption drops occurred alongside persistently high fuel prices. Between June 2024 and May 2025, prices remained elevated, with diesel and kerosene fluctuating between BDT 104–108 per litre, petrol between BDT 121–127, and octane from BDT 125–131. Although these prices are marginally lower than the August 2022 peak, they remain high by historical standards, maintaining pressure on households, transport services, and farming operations (BPC, Local Selling Price of Petroleum Products, 2025). Although the BPC is supposed to follow automated pricing formula considering the global price, there is little reflection of it in retail pricing and consumers face the burden of a higher price.
The impacts of these high fuel prices have been felt across sectors. In transport, bus and freight services have reduced operations or raised fares, triggering public dissatisfaction and reduced mobility, especially in rural and peri-urban areas. Informal operators such as autorickshaws and motorbike ride-share drivers reported income losses due to low passenger demand and high fuel costs. In agriculture, diesel price increases raised irrigation costs by 20–30 per cent, particularly affecting boro season farmers reliant on shallow diesel pumps.
Industries have also suffered, especially during power outages, which forced many factories to switch to diesel-powered generators. This shift has significantly increased energy costs, particularly in energy-intensive sectors like textiles, steel, and ceramics. SMEs without captive or backup systems were hit harder, leading to production delays.
These underscore the vulnerability of Bangladesh’s petroleum fuel users to international market shocks. Without policy measures to improve fuel efficiency, stabilise prices, or protect lowincome users, such fuel price disruptions could continue to destabilise critical sectors in the future.
Inefficiencies and system loss: A core issue is inefficiency and mismanagement within the energy sector itself. Bangladesh suffers from gas system losses of 12–14 per cent, significantly higher than the international standard of 2 per cent. Each 1 per cent system loss is estimated to cost around Tk 800 billion. Despite this, institutional reforms have lagged, and there is little accountability or oversight to address wastage or corruption.
Fiscal planning has also been weak. In the current fiscal year, the Energy and Mineral Resources Division received a modest allocation of Tk 10.87 billion, of which only 10.4 per cent was spent in the first six months. While the government continues to prioritise imported LNG—having spent over Tk 1600 billion on imports from 2017 to 2023—investment in domestic gas exploration remains minimal. The state-owned BAPEX receives just Tk 10 billion annually. A recent tender for offshore oil and gas exploration failed to attract any foreign bidders, reflecting low investor confidence.
Meanwhile, energy subsidies remain substantial, approximately Tk 360 billion for electricity and Tk 200 billion for energy annually, in addition to Tk 60 billion spent on LNG imports. Yet these investments are undermined by systemic inefficiencies, poor governance, and a lack of competition in public procurement processes.
Bureaucratic inertia, political cronyism, and reliance on short-term import-based solutions are obstructing sustainable energy development.
Sectoral impacts of the energy crisis based on KIIs: The energy crisis in Bangladesh has had cascading effects across all layers of society and the economy. Beyond the macro-level gaps in supply and rising prices, the most critical disruptions are being experienced by end-users whose lives and livelihoods depend on affordable and stable access to electricity, gas, and fuel. The three most affected segments, households, industries, and the transportation sector, have undergone significant operational, behavioural, and financial adjustments to cope with the ongoing crisis. These user-level disruptions form the core of the current crisis and are expected to be further validated through the planned survey-based data collection.
Household sector. For households, the energy crisis has meant frequent and prolonged electricity outages, especially during peak hours and the summer season. In urban settings, families have experienced 1–4 hours of daily load shedding, while rural areas face even longer and less predictable outages. These interruptions have not only disrupted daily routines such as cooking, bathing, and studying but also created stress in maintaining access to digital services like mobile banking, online education, and remote work. In households with piped gas connections, low pressure has become a daily obstacle, especially during morning and evening hours. This has forced many families to shift to LPG cylinders as a substitute. However, LPG prices have surged, rising from Tk 900 to Tk 1,500 for a 12.5 kg cylinder between 2021 and 2023, causing an average monthly increase in cooking energy costs of Tk 500 to Tk 800 for many families.
The financial burden is further compounded by power outages, which have prompted middle and high-income families to invest in inverters, solar panels, or even diesel generators. However, these alternatives remain out of reach for poorer households, who are often left without any backup during outages. Consequently, low-income families have resorted to undercooking meals, using traditional fuels, or reducing energy use altogether. In addition to cooking and cooling, energy shortages have directly impacted education. Students are unable to charge devices, attend online classes, or study during evening hours due to power cuts. The energy crisis has also strained healthcare access, with refrigeration for medicines and the use of nebulisers or diagnostic equipment in homes being affected. Furthermore, inflation in transport and food prices—both driven by fuel costs has reduced household purchasing power, leading to a shift in consumption behaviour, where families are allocating more of their monthly budget to energy and less to education, nutrition, and healthcare.
Industrial sector. Loss in production and earning: Bangladesh’s industrial sector—particularly energy-intensive industries such as textiles, garments, cement, ceramics, and steel—has been severely affected by a prolonged and worsening energy crisis. These industries rely heavily on natural gas for process heating and captive power generation. However, due to declining domestic gas production and a policy preference to prioritise gas supply for power plants, industrial gas allocations have been frequently curtailed, often without sufficient notice. This has forced many factories to operate well below capacity or suspend operations altogether. Between 2021 and 2023, production in several key industrial zones dropped by an estimated 20–30 per cent during peak shortage periods. In recent months, the situation has further deteriorated, with many textile and garment factories operating at only 40–50 per cent capacity. Output in yarn, fabric, and garments has declined sharply, and nearly half of the textile factories have reportedly shut down. As a stopgap, large industries have turned to diesel generators, but with diesel prices exceeding Tk 104 per litre, the cost of self-generated power is three to four times higher than that of grid electricity.
This has significantly driven up production costs and negatively impacted their earnings. Small and medium enterprises (SMEs) have suffered even more. Lacking the capital to purchase backup generators or absorb price shocks, many SMEs, especially in plastics, agro-processing, and light engineering, have faced declining output, order cancellations, and missed delivery deadlines. Many have laid off contract workers or shifted to part-time operations. Energy insecurity has also created hesitancy in new investments and delayed technology upgrades in manufacturing. In the garments and textiles sector, which accounts for over 80 per cent of Bangladesh’s exports, energy disruptions have led to shipment delays, resulting in financial penalties and reputational damage with international buyers. Even export processing zones (EPZs), once considered infrastructure reliable, have not been immune. Altogether, the unpredictability of energy supply is now considered one of the most pressing constraints to industrial productivity, expansion, and longterm competitiveness, especially when compared to regional competitors like Vietnam and India, who are offering more energy-secure environments for industrial investment.
Beyond the garments and SMEs, the broader industrial landscape has also suffered. Production in the steel industry has dropped by 25–30 per cent, while the ceramic industry has seen a decline of more than 50 per cent due to energy shortages.
Transportation sector. The transportation sector has experienced severe pressure due to fuel price volatility and shortages in compressed natural gas (CNG). Diesel, which powers most freight trucks, buses, and irrigation pumps, surged to Tk 108 per litre in 2024. This caused operating costs to increase by 15–25 per cent, leading logistics firms to reduce fleet use and pass costs to consumers through higher transport fares and commodity prices. Delays in goods delivery, particularly perishable agricultural product, have affected farm incomes and raised food prices in urban markets. Petrol prices, fluctuating between Tk 121 and 127 per litre, have likewise increased costs for private vehicle users and ride-sharing services, further reducing affordability for daily commuters CNG, once a cheaper and cleaner transport fuel, has faced erratic supply despite increased annual allocation. Long queues at CNG stations have become the norm, prompting many drivers to switch to petrol or diesel, thereby increasing their fuel costs by 25–30 per cent. Auto-rickshaw drivers and informal transport operators have reported a 30–40 per cent drop in daily earnings due to reduced trips, fuel switching, and rising costs. Public transport operators have raised fares, which disproportionately affect low-income commuters who rely on daily travel for work and education. App-based ride-hailing services have also seen driver dropout rates rise, with many citing poor fuel margins and reduced passenger demand as key reasons. These impacts have reduced transport availability, increased commuter costs, and introduced logistical inefficiencies that affect other sectors, including agriculture and retail distribution.
Policy recommendations: The energy situation in Bangladesh requires a comprehensive approach. First, it is important to diversify the energy sources. One method to overcome the domestic supply deficit is to expedite gas exploration, particularly offshore. On the other hand, promotion and scaling up of renewable energy sources, notably wind and solar, should be prioritised in order to reduce dependency on imports and fulfil at least 10 per cent of total electricity consumption by 2030.
Second, pricing adjustments should find a balance between fairness and efficiency. The establishment of an automated, transparent fuel pricing method will help with volatility management. Earlier, CPD investigated the pricing mechanism of BPC and BERC and found that the pricing could be reduced up to Tk15 per litre. MoEPMR should follow the scientific pricing mechanism in order to set the fuel and electricity prices.
Third, the infrastructure needs to be updated. Smart monitoring technology and grid upgrades are required to reduce transmission and distribution losses, which are now around 12 per cent.
To expedite the transition to clean transportation, the government should invest in EV charging infrastructure throughout the country, promoting concessional finance and public-private partnerships.
Industrial and business organisations are needed to ensure uninterrupted power and energy supply on a priority basis. In order to do this, the government should promote renewable energy as an alternative and provide fiscal incentives directly for adopting RE for using industrial sheds, rooftops, or fallow lands. Additionally, the MoEPMR must monitor this initiative and their billing amount for tracking usage records and provide incentives accordingly.
Finally, institutional reforms are needed. In order to manage fuel prices and tariffs independently, BERC needs to be strengthened. Petro Bangla, Power Division, and BPC need to collaborate to ensure integrated energy planning and rapid crisis response. Digitising energy data and making price and allocation more transparent will make policymaking more responsive.

Dr Fahmida Khatun, Executive Director, Centre for Policy Dialogue (CPD); Professor Mustafizur Rahman, Distinguished Fellow, CPD; Dr Khondaker Golam Moazzem, Research Director, CPD; Mr Muntaseer Kamal and Mr Syed Yusuf Saadat, Research Fellows, CPD. moazzem@cpd.org.bd; avra@cpd.org.bd
[Abu Saleh Md Shamim Alam Shibly and Tamim Ahmed, Senior Research Associates; Afrin Mahbub, Preetilata Khondaker Huq, Anindita Islam, Md Mehadi Hasan Shamim, Nuzaira Zareen, Ayesha Suhaima Rab, Safrina Kamal, Khaled Al Faruque, Md. Imran Nazir, and Tanbin Alam Chowdhury, Programme Associates; and Syeda Safia Zahid, Research Intern of CPD provide research assistance.]