Bangladesh’s industrial growth hampered by soaring LNG prices, says power minister
Bangladesh’s power minister warned that record LNG prices are curbing industrial output, prompting higher subsidies and straining the country’s fiscal space.
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Higher LNG prices reduce regional demand, hurting Oil & Gas and Power sectors; avoid buying related tickers.
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Sectors: Oil & Gas, Power — Negative · Do not buy. PSX tickers: OGDC. Higher LNG prices reduce regional demand, hurting Oil & Gas and Power sectors; avoid buying related tickers.
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Open on Business Recorder## High LNG costs curb Bangladesh’s industry
Bangladesh’s Power Minister Iqbal Hasan Mahmud told participants at the Gastech conference that the rapid rise in liquefied natural gas (LNG) prices is slowing the nation’s industrial growth and forcing electricity outages. He said production levels are falling and the situation is having a “big effect” on the economy.
## Subsidy burden pressures the budget
Because the country relies on imported LNG for more than 40% of its electricity, the government has had to increase subsidies to keep gas affordable for consumers. Mahmud noted that the rising subsidy bill is crowding out funding for other development programmes, even though Bangladesh already spends close to 4% of GDP on power and gas subsidies.
## Supply disruptions drive up spot prices
Bangladesh was compelled to purchase LNG on the spot market after Qatar, which supplies about 95% of its imports, halted shipments following the effective closure of the Strait of Hormuz. Spot LNG prices in Asia have more than doubled since the onset of the U.S.–Israeli‑Iran conflict, reaching $25.70 per million British thermal units last week.
## Looking east and diversifying energy mix
With Middle‑East supplies constrained and Russian LNG unavailable due to sanctions, Bangladesh is turning to Indonesia, Australia and China for future deliveries. The government also announced plans to add 10,000 MW of solar capacity over the next five years and to grant five‑year tax holidays for investors in solar and lithium‑battery projects. Discussions are under way with China on small modular nuclear reactors, and the country may increase coal use as coal prices have remained relatively stable.
## Regional implications
The sharp rise in LNG costs and Bangladesh’s shift away from Middle‑East supplies could affect regional LNG demand patterns, influencing the outlook for Pakistani oil‑and‑gas exporters and power generators that rely on imported gas.
## Outlook
Analysts expect Bangladesh’s industrial slowdown to persist as long as LNG prices stay elevated, unless alternative energy projects accelerate or global supply constraints ease.