Bangladesh is currently facing a critical situation labeled as an “energy trap,” primarily due to its heavy reliance on fuel imports, which cost the nation approximately $12 billion every year. This heavy dependence leaves Bangladesh highly susceptible to global energy price fluctuations, according to business leaders and energy experts who voiced their concerns today.
Renewable energy was proposed as a potential solution to this energy crisis. However, a significant delay of more than a decade in transitioning from fossil fuels to renewable sources has hindered Bangladesh from meeting its renewable energy targets. This was highlighted during a roundtable discussion on the future of the country’s energy sector organized by the Bangladesh Chamber of Industries (BCI) in Dhaka.
Hossain Zillur Rahman, the executive chairman of the Power and Participation Research Centre (PPRC), emphasized that Bangladesh is not only facing an energy crisis but is now ensnared in an energy trap that endangers its medium-term economic growth. He stressed the importance of moving discussions beyond individual expert opinions to incorporate the private sector’s experiences, which are significantly impacted by the prevailing uncertainty in the energy sector.
Rahman pointed out that businesses are burdened more by unpredictability than just the cost factor. He highlighted the necessity for a coordinated strategy to transition into a more diversified energy mix, including renewables, coal, regional cooperation, and enhanced refining capabilities to safeguard national sovereignty.
Transitioning to renewable energy was described as a potentially transformative national agenda, with Rahman urging policymakers to concentrate on practical and politically feasible solutions for this vital shift. Currently, over 52 percent of Bangladesh’s primary energy consumption is reliant on imports, a significant increase from previous years, as stated by Shafiqul Alam, lead analyst at the Institute of Energy Economics and Financial Analysis (IEEFA).
The escalating dependence on imported fossil fuels has emerged as a substantial economic vulnerability for Bangladesh, exposing the economy to global energy market fluctuations and compelling the government to allocate nearly $12 billion annually for fuel imports. Anwar-ul-Alam Chowdhury Parvez, president of BCI, warned that with rising global fuel prices, an additional $2.2 billion may be required to sustain the current energy supply levels.
Moreover, Bangladesh is grappling with a daily electricity deficit of 1,500 to 2,000 megawatts, further exacerbating the energy crisis. This shortage is acutely impacting small businesses, particularly rural factories facing prolonged power outages. Parvez highlighted the struggles of small entrepreneurs who are battling to keep their operations afloat under these challenging circumstances.
David Hasanat, president of the Bangladesh Independent Power Producers’ Association (BIPPA), emphasized that the risks associated with the energy crisis have been evident for over a decade. He criticized the lack of decisive action on renewable energy and efficiency measures despite being aware of the impending risks. Hasanat cited slow policy support, financing obstacles, land scarcity, and poor implementation as factors compounding the energy crisis, leading to increased costs, power instability, and trade barriers related to carbon emissions.
While renewable energy adoption is seen as the most viable solution to escape the energy trap, progress in this area has stalled. Mostafa Al Mahmud, president of the Bangladesh Sustainable and Renewable Energy Association, refuted claims that a shortage of land was impeding the renewable energy transition, attributing the delays to misinformation rather than land availability issues.
Mahmud urged the government to introduce five-year tax exemptions on solar equipment and batteries, facilitate access to green financing, and ensure adequate land and grid support to expedite the transition to renewable energy sources. Siddique Zobair, adviser to GreenTech Foundation Bangladesh, highlighted that Bangladesh has fallen significantly behind its renewable energy targets set in 2008 due to delays in land allocation, financing challenges, and the absence of sovereign guarantees, which continue to deter private investments in the renewable energy sector.
