Does the govt really want to escape the energy import trap?

Bangladesh's proposed budget for FY2026-27 sends two conflicting signals about the country's energy future.

On the one hand, the finance minister acknowledges a reality that energy experts have highlighted for years: excessive dependence on imported fuels has become a major threat to Bangladesh's energy security. 

Referring to recent geopolitical tensions in the Middle East, he warned that reliance on imported LNG and petroleum products exposes the country to international price shocks and supply disruptions.

On the other hand, the same budget proposes expanding LNG infrastructure, including plans for new import terminals. 

This raises a fundamental question: if import dependence is the problem, why does the government want to invest in infrastructure that could lock Bangladesh into decades of further fuel imports?

This contradiction lies at the centre of the country's energy policy debate.

The finance minister deserves credit for identifying the weaknesses of past policies. 

For years, Bangladesh pursued an energy strategy that increasingly relied on imported fuels while domestic gas exploration and renewable energy development received limited attention. 

As local gas reserves declined, LNG imports were promoted as the quickest solution to growing energy demand.

The consequences are now clear. Bangladesh spends billions of dollars annually on LNG imports. Every increase in global fuel prices raises electricity generation costs, puts pressure on foreign exchange reserves and increases the government's subsidy burden. 

Ultimately, consumers pay the price through higher tariffs or public spending.

The budget speech correctly recognises these risks. It also outlines an ambitious vision for renewable energy, including a target of generating 20% of electricity from renewable sources by 2030 and up to 50% by 2050. 

Rooftop solar, utility-scale solar parks, coastal wind projects, energy storage and grid modernisation all receive attention. Tax exemptions on solar equipment are another welcome step.

These measures indicate a long-overdue shift in policy thinking. 

However, targets alone do not drive energy transitions. The real test is whether financial allocations and institutional priorities support these ambitions.

Here, the budget raises questions.

Of the Tk17,345 crore allocated to the Ministry of Power and Energy, only Tk2,258 crore is earmarked for the Energy and Mineral Resources Division. 

Much of this amount will be spent on routine operations and ongoing projects, leaving limited resources for large-scale domestic oil and gas exploration or strategic investments in energy development.

At the same time, the government has announced ambitious plans through Bapex, including drilling 69 wells, carrying out workovers on 31 wells and expanding geological and seismic surveys. These are encouraging proposals. 

Yet exploration is expensive. A single deep exploratory well can cost several hundred crore taka, while offshore exploration costs are significantly higher.

The obvious question is whether adequate funding exists to implement these plans. 

Without substantial investment, there is a risk that they will remain ambitious announcements rather than meaningful action.

In contrast, the government's plans for LNG infrastructure appear far more concrete. The budget proposes reviewing additional LNG terminals in Moheshkhali while advancing preparations for a land-based LNG terminal at Matarbari.

This is where the policy inconsistency becomes most apparent.

An LNG terminal is not merely a piece of infrastructure; it is a long-term commitment to imported fuel. 

Such projects require massive investments and are designed to operate for decades. Once built, they create strong economic incentives to continue importing LNG to justify the investment.

In effect, every new LNG terminal deepens Bangladesh's dependence on international energy markets.

If policymakers genuinely believe that import dependence is a strategic vulnerability, expanding LNG infrastructure seems difficult to reconcile with that assessment.

The economic implications are significant. Bangladesh already spends an estimated $3-4 billion annually on LNG imports. At a time when foreign exchange reserves remain under pressure, this is a substantial burden. 

Moreover, LNG price volatility continues to create uncertainty in electricity generation costs.

The finance minister himself acknowledges that power-sector subsidies have exceeded Tk40,000 crore due to the gap between production costs and consumer tariffs. 

Imported fuel costs are a major contributor to this problem.

Given this reality, expanding LNG infrastructure appears to address the symptoms rather than the root causes of Bangladesh's energy challenges.

There is another concern. Public resources, policy attention and investment capital are limited. Every taka directed toward LNG infrastructure is a taka unavailable for domestic gas exploration, renewable energy, energy storage or grid modernisation.

This matters because the economics of clean energy are changing rapidly. 

The cost of solar power has fallen dramatically over the past decade, while battery technologies continue to become more affordable. 

Countries across Asia, including China, India and Vietnam, are accelerating investments in renewable energy not only for environmental reasons but because it increasingly makes economic sense.

For a country with limited foreign exchange reserves and growing energy demand, reducing dependence on imported fuels should be a strategic priority.

Bangladesh therefore faces a clear choice. It can continue expanding LNG imports and associated infrastructure, accepting long-term exposure to global fuel markets. Or it can place greater emphasis on domestic gas exploration, renewable energy development and investments that reduce dependence on imported fuels over time.

The finance minister's budget speech correctly identifies the dangers of excessive import-dependence. 

Yet the proposed expansion of LNG infrastructure points in the opposite direction.

If the government truly wants to escape the energy import trap, domestic resource development and renewable energy must move from the margins of policy to its centre. 

Otherwise, energy security will remain more of a slogan than a strategy.

Ashraful Islam Raana works at an international development organisation and can be reached at mandalcenter18@gmail.com

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.