Bangladesh's LNG Expansion Raises Affordability and Financial Risk Concerns

Bangladesh is facing a critical dilemma in its energy planning. Despite struggling with the costs of its current liquefied natural gas (LNG) imports, the government is planning to more than double its import capacity by 2029. The concern is not whether Bangladesh needs LNG, but whether it can afford such a massive expansion, which could create another financial burden similar to the one in the power sector.

The country currently operates two floating LNG terminals with a combined capacity of 1,100 million cubic feet per day (mmcfd). The government plans to add three more terminals by 2029, raising the total capacity to 2,700 mmcfd. While the rationale is understandable due to declining domestic gas reserves and industrial shortages, the ability to import gas does not guarantee affordability. Geopolitical tensions, such as the Iran war, have already driven LNG prices to around $29-30 per million British thermal units (MMBtu), highlighting the volatility of global energy markets.

The financial implications are staggering. At an average price of $28 per MMBtu, the annual import bill could reach around $29 billion, which is over one-third of the national budget of Tk 9.38 trillion for FY2026-27. Even with projected global prices below $10 per MMBtu by 2030, the cost would still be substantial. Additionally, the construction and operation of new LNG terminals will incur significant costs, including capacity payments that could total around Tk 75,000 crore, or $7 billion.

The risk of stranded assets is another concern. Bangladesh could complete these terminals but later struggle to import sufficient LNG due to high prices, foreign currency shortages, or global market volatility. The power sector already offers a clear warning, with many idle plants costing the country more than Tk 25,000 crore annually in capacity charges. The government must carefully assess the economic costs and benefits of expanding LNG infrastructure before committing public resources to another long-term financial burden.