Bangladesh LNG subsidy bill could nearly triple as Middle East war drives prices higher

Bangladesh faces a sharp rise in energy subsidies as Middle East conflict disrupts liquefied natural gas (LNG) supplies and drives spot prices higher.

Bangladesh’s energy ministry projects LNG subsidies could reach Tk 40,000 crore (approximately $3.25 billion) this fiscal year, nearly triple last year’s Tk 14,500 crore (approximately $1.18 billion).

Government has already spent Tk 7,200 crore (approximately $586 million) in first two months.

Dhaka is seeking additional assistance from World Bank, Asian Development Bank, and Asian Infrastructure Investment Bank, while considering delays to low-priority infrastructure projects.

Supply disruptions in Strait of Hormuz and force majeure declarations by major suppliers have pushed Bangladesh back toward costly spot purchases.

Imports fell 83% from July to August, while electricity shortages, fertilizer plant disruptions, and 15% to 20% production declines in key garment hubs underscored widening economic damage.

“Whatever the price, the government will have to import LNG,” said Zahid Hussain, former lead economist at the World Bank’s Dhaka office, to the Daily Star.