Bangladesh’s energy market is shifting from a race to build power plants toward a competition to secure affordable fuel and improve the utilisation of existing generation assets.
The country already has nearly 30 GW of grid-connected power capacity. However, gas shortages, expensive fuel imports and foreign-exchange pressures prevent many plants from operating efficiently.
Bangladesh’s generation fleet includes approximately 12.47 GW of gas-fired capacity, 8.42 GW of coal, 5.64 GW of heavy fuel oil, 797 MW of solar, 230 MW of hydropower and 62 MW of wind power. The figures indicate that the country’s immediate electricity challenge is fuel availability rather than insufficient generation capacity.
This changing market creates opportunities for Petrobangla, Chevron, Summit, Excelerate Energy and private power producers. At the same time, increasingly competitive solar projects, energy storage, electricity imports and energy-efficiency investments are emerging as alternatives to expensive LNG.
Bangladesh Spent $3.8 Billion on LNG in 2025
Bangladesh imported approximately 327.8 billion cubic feet of LNG in 2025 at an average cost of around $12 per million British thermal units, according to the Institute for Energy Economics and Financial Analysis.
The resulting LNG import bill was approximately $3.8 billion, equivalent to around BDT403 billion, before regasification and terminal charges.
LNG imports require recurring payments in foreign currency, exposing Bangladesh to international gas prices and depreciation of the taka. The country’s actual LNG cost can therefore increase even when international prices remain unchanged.
Bangladesh began importing LNG in 2018 to compensate for domestic gas shortages. The fuel has since become an important part of the country’s power generation, industrial production and gas-supply strategy.
LNG Costs Could Rise to $8.5–14 Billion Annually
IEEFA estimates that Bangladesh’s LNG imports could increase to approximately 730 billion cubic feet annually under a high-import scenario after 2030.
At an LNG price of $12 per million British thermal units, imports of this size could cost approximately $8.5 billion a year. If the price reaches $20, Bangladesh’s annual LNG expenditure could approach $14 billion, Bangladesh LNG import outlook and energy crisis shows.
This $5.5 billion difference demonstrates the country’s exposure to international commodity-price volatility.
High LNG prices would also increase electricity-generation costs and government subsidy requirements. IEEFA estimates that imported LNG costing approximately BDT50 per cubic metre could add more than BDT6 per kWh to the fuel cost of gas-fired electricity.
The financial viability of future LNG-to-power projects will consequently depend on plant efficiency, utilisation, fuel-supply agreements, power-purchase contracts and the government’s ability to recover costs.
Excelerate Secures LNG Supply Contract Through 2040
Petrobangla remains at the centre of Bangladesh’s gas market because it manages LNG procurement and the national gas-supply system.
Excelerate Energy and Petrobangla long-term LNG agreement
Excelerate Energy has signed a 15-year agreement to supply Petrobangla with 0.85 million tonnes of LNG annually in 2026 and 2027. The contracted volume will increase to one million tonnes annually from 2028 through 2040.
Summit has also been associated with a proposed long-term LNG agreement involving approximately 1.5 million tonnes per year.
These contracts can improve supply visibility and reduce dependence on volatile spot-market purchases. However, long-term agreements also create substantial financial commitments if international prices decline, electricity demand changes or renewable energy becomes more competitive.
Bangladesh’s floating storage and regasification units, operated by Summit and Excelerate, provide a relatively quick route for increasing gas supply. Their strategic value depends on terminal availability, LNG cargo delivery, pipeline capacity and utilisation—not just their stated regasification capacity.
Chevron’s natural-gas operations in Bangladesh
Chevron has invested more than $4 billion in Bangladesh and operates three gas fields that supply a significant portion of the country’s domestic production.
Domestic gas is strategically important because every additional unit produced locally can reduce LNG purchases and foreign-currency expenditure.
Investment in exploration, appraisal wells and field development could provide Bangladesh with a longer-term alternative to continuously increasing LNG imports. However, exploration involves geological and execution risks, and spending does not guarantee commercially recoverable discoveries.
Bangladesh will therefore need to balance domestic exploration with flexible LNG procurement rather than depend exclusively on either source.
Gas-to-Power Investments Face Fuel-Supply Risk
Private power producers have developed substantial generation portfolios, but their investment prospects increasingly depend on fuel availability and actual plant utilisation.
United Group supplies more than 1.1 GW to the national grid. Its development portfolio includes the 590 MW United Chattogram Power project, which is designed to operate using natural gas and LNG.
The dual-fuel strategy provides flexibility, but imported LNG can make gas-fired electricity considerably more expensive. A large plant that cannot secure affordable fuel may operate at a lower utilisation rate despite its installed capacity.
Summit has an integrated position spanning electricity generation, LNG infrastructure and fuel supply. This structure allows the company to participate across the LNG-to-power value chain. However, high LNG costs could reduce the utilisation of its generation assets while placing pressure on tariffs and government payments.
Future energy investments in Bangladesh must therefore be evaluated according to expected electricity output, fuel security and generation cost—not simply the number of megawatts installed.
Bangladesh Signs 818 MW of Solar at Lower Tariff
Renewable energy is becoming a direct economic competitor to imported LNG.
In July 2026, Bangladesh signed agreements with 11 independent power producers to develop solar projects totalling 818 MW. The projects secured an average electricity tariff of 7.80 US cents per kWh.
The tariff was approximately 2.5 US cents below earlier rates for comparable solar projects, demonstrating the improving competitiveness of renewable electricity.
Solar generation can reduce gas consumption during daylight hours, while battery storage can shift part of that electricity into evening periods. Batteries can also provide short-duration grid-balancing services traditionally supplied by gas-fired power stations.
Gas generation will remain important for dispatchable power and seasonal balancing. However, the combination of solar and battery storage could reduce the operating hours of LNG-dependent plants.
Energy Efficiency Could Save $460 Million Annually
Energy efficiency offers another low-cost way to reduce Bangladesh’s dependence on imported gas.
IEEFA’s Bangladesh energy-efficiency and LNG savings report prepared by Shafiqul Alam estimates that improving the efficiency of industrial captive-power generation could lower annual LNG requirements by approximately 50.18 billion cubic feet. The reduction could generate savings of around $460 million per year.
Efficiency investments avoid the need to purchase additional fuel and can be implemented through better industrial equipment, energy-management systems and process optimisation.
Reducing LNG demand by 50.18 billion cubic feet would be equivalent to more than 15 percent of Bangladesh’s estimated 2025 LNG import volume.
Electricity Imports Reach 2.7 GW
Cross-border electricity provides Bangladesh with another alternative to building additional fuel-dependent generation.
Imported electricity represents approximately 2.7 GW of the country’s available power supply. Further regional interconnections could allow Bangladesh to access lower-cost generation from neighbouring countries without purchasing LNG for domestic power plants.
The commercial value of additional electricity imports will depend on transmission availability, contract prices, regional supply and foreign-exchange costs. Nevertheless, imports can diversify Bangladesh’s electricity system and reduce dependence on a single fuel.
Bangladesh’s Energy Investment Focus Moves From Capacity to Cost
Bangladesh’s future energy market will be shaped by the competition between LNG, domestic gas, renewable power, battery storage, imported electricity and energy efficiency.
The country has nearly 30 GW of generation capacity, but the usefulness of that infrastructure depends on reliable and affordable fuel. LNG imports already cost approximately $3.8 billion in 2025 and could rise to between $8.5 billion and $14 billion annually if import requirements reach 730 billion cubic feet.
Solar is simultaneously becoming more competitive, with 818 MW of recently contracted projects securing an average tariff of 7.80 US cents per kWh. Industrial efficiency could reduce LNG demand by 50.18 billion cubic feet and save approximately $460 million every year.
These figures indicate that Bangladesh should prioritise investments capable of lowering fuel expenses, improving plant utilisation and reducing exposure to foreign-exchange volatility. The next phase of the country’s energy development will be determined less by how much generation capacity it builds and more by which technologies can deliver reliable electricity at the lowest sustainable cost.
SHAFANA FAZAL
