Gas crisis stalls crores in investment, threatens industries, banks – experts warn
They call for urgent energy reforms.
Highlights:
- Gas crisis puts crores in industrial investment at risk
- Tk7,000-8,000 crore in Trust Bank's industrial loans stranded
- MGI's $600 million-backed projects stalled over gas shortages
- Titas says no new industrial gas connections until supply improves
- Energy minister blames 17 years of neglect in gas exploration
- World Bank warns rising fuel imports and subsidies are straining the economy
The country's worsening gas crisis is putting crores of taka in industrial investment at risk, delaying new projects, disrupting factory operations and increasing financial risks for banks, business leaders, energy experts and policymakers warned yesterday (22 July).
Speaking at the "Energy Security and Transformation of Bangladesh" policy conclave organised by the daily Bonik Barta in Dhaka, participants said prolonged gas shortages have become one of the biggest barriers to investment, while highlighting the need for infrastructure expansion, a diversified energy mix, and greater private sector participation.
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They further called for urgent reforms to boost domestic gas production and strengthen long-term energy security.
Trust Bank Managing Director Ahsan Zaman Chowdhury said the gas shortage has left around Tk7,000-8,000 crore in the bank's industrial financing stranded, warning that the crisis could eventually spill over into the banking sector.
"When banks approve industrial loans, the projects already have gas connection approvals from Titas. Entrepreneurs invest their own money, provide guarantees and install machinery, but the projects cannot begin operations because gas is unavailable," he said.
According to him, expensive imported machinery has remained idle for three to four years in many cases, causing national economic losses as equipment gradually deteriorates.
If the projects eventually become loan defaults, the banking sector will also come under severe pressure, he added.
Echoing similar concerns, Meghna Group of Industries Chairman Mostafa Kamal said the gas crisis, combined with administrative bottlenecks, is discouraging new investment and threatening existing industries.
Although the government speaks of improving the ease of doing business, entrepreneurs continue to struggle to secure gas connections, regulatory approvals and infrastructure support, while also having to meet the conditions of foreign lenders, he said.
The MGI chairman noted that the Bangladesh Economic Zones Authority had promised to provide gas, electricity and water to the company's economic zones. Relying on those commitments, the company continued to attract investors, with 15 companies from the US, Europe and China investing there and creating around 12,000 jobs.
However, delayed gas connections have stalled project implementation despite nearly $600 million in financing from the International Finance Corporation (IFC), the World Bank and other international lenders, Mostafa said, adding that unlike domestic banks, foreign lenders offer little flexibility in extending project deadlines, exposing investors to substantial financial risks.
The industrialist, whose group operates 57 factories employing around 65,000 people, warned that prolonged delays in one major project could undermine the viability of several others.
East Coast Group Chairman Azam J Chowdhury said policy unpredictability remains one of the biggest deterrents to investment. While the government talks about "zero duty", procedures at the NBR and Customs remain complicated, he said.
Transcom Group CEO Simeen Rahman said for modern manufacturing, the challenge is no longer just energy availability, but energy reliability and power quality.
"Gas shortages, voltage fluctuations and unplanned interruptions do more than just stop production – they create a wave of uncertainty that destabilises our entire supply chain and inflates operating costs," she said.
Energy expert M Tamim said Bangladesh should pursue a diversified energy mix rather than aim for complete energy independence.
"There is absolutely no chance of becoming fully energy-independent. Our primary goal must be to use renewable energy to reduce our crushing reliance on imports, not to dream of total self-sufficiency," he said, urging greater regional electricity trade and stronger government support for large-scale solar projects.
Former Power Grid Bangladesh chairman M Rezwan Khan, meanwhile, proposed a three-tier electricity tariff structure covering peak, off-peak and super off-peak hours.
"If we raise peak-hour prices but lower them during off-peak times, the average cost remains the same for the government, but it creates a massive incentive for businesses and apartments to replace diesel generators with battery storage," he said.
No new industrial gas connections
Titas Gas Transmission and Distribution PLC Managing Director Shahnewaz Parvez said the company cannot provide new industrial gas connections unless domestic gas production increases or overall supply improves.
More than 500 customers have already deposited money for gas connections after receiving demand notes but remain unable to obtain supplies because of inadequate supply, he said.
Titas distributes about 60% of the country's natural gas and requires around 2,200 million cubic feet per day (mmcfd) to meet demand.
According to Shahnewaz, although at least 1,700 mmcfd is needed to maintain relatively normal operations, Titas is currently receiving only 1,500-1,550 mmcfd.
The situation has worsened after one floating LNG terminal recently went offline, intensifying shortages, particularly in Gazipur's industrial belt, he added.
Neglect in gas exploration
Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmood Tuku attributed the crisis to years of neglect in domestic gas exploration. "About 28,000MW of generation capacity has been built, but no effective initiative was taken to increase domestic gas production. Not a single gas well was drilled over the past 17 years."
He also noted that Bangladesh depends on only two floating LNG terminals, leaving the gas supply system vulnerable whenever one terminal becomes inoperable.
Meanwhile, speaking about the country's power distribution system, the minister said the government wants to privatise power distribution to improve efficiency, accountability and bill collection.
He invited the private sector to submit proposals to take over the country's electricity distribution companies, adding that the prime minister has given consent to move ahead with the initiative.
He also said the government is considering allowing private companies to import petroleum products to encourage competition and reduce the state's role in the sector.
World Bank Country Director for Bangladesh and Bhutan Jean Pesme said Bangladesh's growing reliance on imported fuel and the widening gap between energy supply costs and consumer tariffs are increasing fiscal pressure.
He said around 30% of gas demand, 95% of oil and 90% of coal consumption now depend on imports, exposing the economy to global price volatility and supply disruptions.
According to the World Bank, energy subsidies now account for about 1.1% of GDP, underscoring the need for gradual tariff reforms, expansion of renewable energy, regional power trade and greater private investment in the gas value chain.
Omera Renewable Energy CEO Masudur Rahim said policy inconsistencies were also slowing investment in renewable energy. "Although the government announced zero-duty benefits for solar equipment, importers are not receiving those incentives due to conflicting tax conditions, discouraging rooftop solar expansion despite its significant potential."
