Bangladesh is facing a deepening energy crisis driven by heavy reliance on imported fuels, rising global prices, and mounting pressure on foreign exchange reserves, according to the Bangladesh Sustainable and Renewable Energy Association (BSREA).

At a press briefing held at the National Press Club on Monday, BSREA said the current situation underscores the urgent need to accelerate the country’s transition to renewable energy as a long-term, sustainable solution.

The association noted that the high cost of imported liquefied natural gas (LNG), coal, and oil is forcing the government to provide substantial daily subsidies estimated at over Tk 200 cr to sustain power generation. This trend poses serious risks to fiscal management and overall macroeconomic stability.

Bangladesh currently depends on imports for more than 60 pc of its energy needs, making it highly vulnerable to global price shocks and supply disruptions. The ongoing geopolitical tensions, particularly involving the United States and Iran, have further destabilized global energy markets.

Crude oil prices have surged to around $115–$120 per barrel, while the Strait of Hormuz through which almost 20 pc of global oil and LNG shipments pas remains at risk, adding to supply uncertainty.

The situation has been compounded by declining domestic gas production. While daily gas demand in the power sector exceeds 2,500 mmcfd, supply has dropped to only 850–900 mmcfd, creating a significant shortfall. This could result in a power generation deficit of 1,500–1,800 megawatts.

At the same time, Bangladesh lacks a strong strategic petroleum reserve, with current storage capacity sufficient for only 35–40 days far below levels seen in countries like China and Japan.

These constraints are already affecting industrial output, particularly in export-oriented sectors such as readymade garments, where production has declined by up to 30–40 percent due to gas shortages and load shedding.

Despite its potential, the renewable energy sector especially solar power has not received adequate policy support, BSREA said. Import duties, taxes, and value-added tax on renewable energy equipment currently range between 50 and 60 percent, discouraging investment and expansion.

In contrast, the conventional energy sector continues to benefit from various subsidies and policy incentives, creating an imbalance in energy policy.

BSREA highlighted that countries such as India, Vietnam, and China have successfully expanded renewable energy by offering tax exemptions, low import duties, and affordable financing.

To address the crisis, BSREA outlined a series of policy recommendations:

· Reduce or eliminate import duties and taxes on renewable energy equipment to make the sector more competitive.

· Remove duties on lithium-ion batteries and energy storage systems to support renewable integration.

· Ensure long-term, low-interest financing (3.5%–4.5%) for renewable energy projects.

· Revive 31 stalled solar power projects with a combined capacity exceeding 3,000 MW.

· Introduce fair wheeling charges to encourage private investment.

· Relaunch rooftop solar programmes across residential, commercial, and industrial sectors.

· Offer tax holidays of up to 20 years for renewable energy projects.

· Identify land and facilitate transparent bidding for utility-scale solar projects.

· Promote solar-powered irrigation by offering duty-free benefits and financial support.

· Develop clear policies for waste-to-energy projects and encourage private sector participation.

· Simplify net metering systems to make them more accessible and efficient.

BSREA emphasized that while the current energy crisis presents significant challenges, it also offers a historic opportunity for Bangladesh to transition towards a more sustainable, self-reliant, and environmentally friendly energy system.

“With the right policy support, financial incentives, and private sector participation, renewable energy can play a transformative role in ensuring long-term energy security,” the association said.