Bangladesh's LNG Subsidy Bill Set to Triple Amid Middle East Conflict
The ongoing conflict in the Middle East is causing a severe energy crisis for Bangladesh, resulting in a potential tripled LNG subsidy bill of Tk 40,000 crore ($3.3 billion) this fiscal year.
The government has already spent Tk 7,200 crore in subsidies in the first two months of the current fiscal year, and the energy ministry projects that the total cost could reach Tk 40,000 crore, nearly three times the final payout of last year's subsidy bill of Tk 14,500 crore.
The country is heavily reliant on imported fossil fuels, and the conflict in the Middle East has disrupted long-term contracts with major LNG suppliers such as Qatar. As a result, Bangladesh has been forced to purchase spot cargoes at higher prices, with the most recent purchase costing over $28 per unit, making it the most expensive since 2022.
The government is seeking assistance from multilateral lenders such as the World Bank and Asian Development Bank to bridge the fiscal deficit. Analysts warn that this approach could be financially ruinous, estimating that if current fuel prices persist, Bangladesh's fossil fuel import bill could rise by up to $2.8 billion in 2026.