Middle East Crisis: Impact on Bangladesh's Power Sector and Electricity Bills
1. Surge in Generation Costs
Bangladesh relies heavily on imported Liquefied Natural Gas (LNG) and Liquid Fuel (Diesel and Furnace Oil) to run its power plants. Following the escalation of the conflict in early March 2026, global Brent crude prices surged to nearly $114–$119 per barrel, compared to a pre-war average of around $65–$70. This massive jump has nearly doubled the cost of generating a single unit of electricity in many domestic plants.
2. The "LNG Chokehold"
Approximately 72% of Bangladesh's LNG imports come from Qatar and the UAE via the Strait of Hormuz. Recent reports indicate that QatarEnergy has invoked force majeure on several shipments due to the conflict, forcing Bangladesh to turn to the expensive spot market. In March 2026 alone, the government purchased LNG at more than double the January rate, a cost that is difficult to sustain without passing it on to the consumer.
3. Rising Coal and Freight Costs
As gas supplies dwindle, many nations (including Bangladesh) have ramped up coal-fired power generation. This shift has triggered a global "coal rally," with prices rising by 9% in just three weeks. Furthermore, maritime insurance and freight rates for vessels entering the region have climbed by as much as 40%, adding another layer of expense to every ton of imported fuel.
4. The Subsidy Dilemma
For the 2025-26 fiscal year, the initial power sector subsidy was allocated at Tk 6,000 crore. However, Petrobangla has already proposed a revised requirement of Tk 26,000 crore to cope with the rising international prices. If the government cannot bridge this massive fiscal gap, it may be forced to implement a phased power tariff hike for retail customers.
