Accelerate domestic gas exploration

The government should speed up domestic gas exploration to expand supply and reduce the country’s reliance on costly imports, according to economists, as the prolonged shortage hurts private investment, industrial output and export competitiveness.

The gas crisis has persisted for years, leaving industries to operate with inadequate supplies, said Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD).

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He said the recent disruption to gas supply from a floating liquefied natural gas (LNG) terminal had made the situation worse. After the floating storage and regasification unit (FSRU) resumes, it will only restore the previous level of shortages rather than solve the underlying problem.

Moazzem said higher LNG imports alone could not close the supply gap. Bangladesh must recognise gas shortages as a structural challenge in the near term while accelerating domestic gas exploration and diversifying its energy sources.

He said the business environment is already under pressure from weak global demand, sluggish exports and high inflation. In this context, protecting existing investment is more important than attracting new investment.

“The immediate priority should be ensuring that existing factories continue operating,” said Moazzem.

He also urged the government to prioritise financially distressed but operational factories when providing incentives, arguing that supporting struggling businesses would generate greater economic benefits than focusing on factories that have already closed.

He added that industries should gradually reduce their dependence on natural gas by investing in energy-efficient machinery, electricity-based production systems, renewable energy and other technologies that could cut energy use by 15 to 20 percent.

M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, said years of inadequate onshore and offshore gas exploration have left Bangladesh heavily dependent on imported LNG, making the country vulnerable to global supply disruptions and price volatility.

He said limited LNG import infrastructure has further constrained gas supply, forcing many industries to operate below capacity.

According to him, gas shortages have reduced production by 30 to 50 percent in sectors such as garments, textiles, steel and ceramics, while power disruptions caused by fuel shortages have also affected small and service-oriented businesses. The resulting uncertainty has discouraged both local and foreign investors from expanding operations or making new investments.

Masrur said Bangladesh should urgently secure additional long-term LNG supply agreements to stabilise gas availability and prices while ensuring adequate foreign exchange support for imports.

Over the medium term, he called for faster onshore and offshore gas exploration and quicker progress on renewable energy projects to reduce dependence on imported fuel.

Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said Bangladesh is facing more than a temporary industrial slowdown.

“The country is confronting a deepening investment and production crisis, where the energy shortage, banking-sector weaknesses, high financing costs, policy uncertainty and weak business confidence reinforce one another,” he said.

He said the gas shortage had become a major burden on industry. Factories operating below capacity faced higher unit costs, delayed deliveries and weaker competitiveness. The impact was even greater on new investment.

Razzaque said Bangladesh continues to pursue industrial growth despite declining domestic gas production, costly LNG imports that are vulnerable to external shocks, and inadequate transmission and distribution infrastructure, raising questions about the credibility of its policy approach.

“There has been no shortage of recommendations. The priority now is implementation,” he added.