Bangladesh imports over 45% of its energy, including LNG and oil transiting the Strait of Hormuz – making it vulnerable to global supply shocks. Disruptions risk electricity shortages, inflation and industrial slowdowns. To bolster resilience, experts urge strategic fuel reserves, supply diversification, prioritised rationing, stronger enforcement, energy efficiency gains and accelerated renewable investment – turning external vulnerability into an opportunity for long-term energy security, writes Major General (retd) Md Nazrul Islam.
A distant strait, a direct impact
Far from the shores of Bangladesh lies a narrow stretch of water that quietly influences the rhythm of the country’s economy. The Strait of Hormuz, connecting the Persian Gulf with the Arabian Sea, is only about 33 kilometres wide at its narrowest point. Yet through this small maritime passage flows nearly one-fifth of the world’s oil supply – about 20 million barrels every day – along with roughly one-quarter of global liquefied natural gas (LNG) trade. For Bangladesh, this distant sea lane is not merely a geographic feature; it is an economic lifeline.
Over the past decade, Bangladesh’s economic expansion has been accompanied by steadily rising energy demand. Industries are expanding, cities are growing, and electricity consumption continues to increase. Domestic energy resources, however, have not kept pace with this growth. As a result, Bangladesh now imports more than 45 per cent of its total energy requirements. Petroleum imports alone amount to approximately 7-8 million tonnes annually, supporting transportation, agriculture and industrial activity. Liquefied natural gas has become equally crucial. Bangladesh imports roughly 100-110 LNG cargoes each year, mainly from Qatar and Oman, supplying about 35-40 per cent of national gas demand.
Bangladesh’s growing energy dependence
Natural gas remains the backbone of the country’s electricity system. Bangladesh’s installed power generation capacity now exceeds 26,000 megawatts, while peak demand has recently crossed 16,000 megawatts. Gas fuels roughly half of national electricity generation, while diesel and furnace oil contribute around 15 per cent, particularly during periods of gas shortage. Renewable energy still accounts for less than 4 per cent of electricity capacity, leaving the energy system heavily dependent on imported fossil fuels transported through vulnerable global sea routes. This dependence makes Bangladesh particularly sensitive to disruptions in global energy supply chains. When tensions rise in the Gulf region, and maritime traffic through the Strait of Hormuz becomes uncertain, the consequences travel far beyond the ocean.
Energy shortages rarely remain confined to the energy sector alone. Gas shortages can reduce electricity generation, slowing factories and industrial production. Higher petroleum prices increase transportation costs, eventually raising food prices and inflation. Fertiliser production, which relies heavily on natural gas, may also face disruptions, affecting agricultural output. In an economy where exports exceed $55 billion annually, largely driven by energy-dependent manufacturing sectors such as ready-made garments, even a temporary disruption in fuel supply can ripple across the broader economy.
Government’s immediate response: Managing the crisis
Recognising these risks, the government has already taken several steps to stabilise the situation and maintain public confidence. The introduction of a fuel rationing system represents the most visible immediate measure. Limits have been imposed on daily fuel purchases by different categories of vehicles in order to prevent panic buying and ensure equitable distribution. At the same time, authorities have instructed fuel stations to monitor sales carefully and maintain proper records to prevent hoarding or speculative trading. Government offices have also been directed to practice energy conservation by reducing unnecessary electricity consumption, limiting official vehicle use and maintaining moderate air-conditioning settings. These steps indicate that the government is attempting to manage demand while safeguarding national fuel reserves. Such precautionary measures are essential in the early stages of any supply disruption. However, the current situation also highlights the need for broader policy measures that strengthen long-term resilience.
Strengthening crisis communication
First, the government must maintain transparent and regular communication with citizens and businesses. During periods of uncertainty, rumours can spread quickly and trigger unnecessary panic. Clear updates on fuel stocks, import arrangements and conservation measures can reassure the public that the situation remains under control. Trust and transparency are essential in managing any national crisis.
Prioritising essential sectors
Second, rationing policies must prioritise sectors critical to national stability and economic continuity. Electricity generation, agriculture, food transportation, public transport systems, export-oriented industries and emergency services should receive priority access to fuel. Such strategic allocation ensures that the country’s most essential activities continue even during temporary shortages.
Ensuring monitoring and enforcement
Third, strong monitoring and enforcement mechanisms must accompany rationing policies. Without proper oversight, rationing systems can encourage hoarding, black markets and unequal distribution. Digital monitoring of fuel distribution, strict supervision of filling stations, and coordinated regulatory enforcement can ensure that the system functions fairly and efficiently.
Building strategic energy reserves
Fourth, Bangladesh should gradually expand its strategic fuel storage capacity to cushion future supply shocks. Many energy-importing countries maintain emergency reserves capable of sustaining national demand during temporary disruptions. The United States holds reserves covering about 90 days of imports, while China and India have also developed substantial strategic storage facilities. Bangladesh’s reserve capacity remains relatively limited, leaving the country more vulnerable during international supply disruptions.
Diversifying energy supply sources
Fifth, diversification of energy supply sources must become a central element of national energy policy. Heavy dependence on a single geographic region exposes the country to geopolitical risks beyond its control. Expanding procurement networks across multiple international markets would improve supply flexibility and reduce vulnerability to regional conflicts.
Improving domestic energy efficiency
Sixth, improving domestic energy efficiency can significantly reduce pressure on imported fuel. Bangladesh still experiences electricity losses in transmission and distribution, while industrial energy use often remains inefficient. Reducing system losses, modernising infrastructure and promoting energy conservation among households and industries can stretch available resources much further during times of stress.
Investing in renewable energy
Seventh, the current disruption should serve as a catalyst for accelerating investment in renewable energy and domestic energy exploration. Bangladesh possesses significant solar potential. Experts estimate that the country could develop over 30 gigawatts of solar power, yet current installed solar capacity remains below one gigawatt. Expanding renewable energy, strengthening regional electricity trade and revitalising domestic gas exploration would gradually reduce dependence on imported fuels.
Turning crisis into opportunity
Energy security ultimately reflects a nation’s capacity to absorb external shocks without losing its balance. Bangladesh has repeatedly demonstrated resilience in the face of floods, cyclones and economic volatility. The challenge now is to extend that same resilience to the energy sector. The Strait of Hormuz may lie thousands of kilometres away, but its tremors can still reach the streets, factories and households of Bangladesh. If the country responds with foresight, disciplined management and effective policy enforcement, this moment of uncertainty can become an opportunity to strengthen the foundations of national energy security.
In the end, resilience does not mean avoiding crisis altogether. It means preparing wisely for the storms that may arise – and navigating them with confidence when they arrive.
Major General (retd) Md Nazrul Islam is a Former Executive Chairman of BEPZA and a former Executive Member (Planning & Development) of BEZA