The energy sector is navigating an acute fragility amid Middle East geopolitical instability and domestic dollar pressures. The strain transmits directly to ready-made garments (RMG), the country’s main export earner. Industry figures indicate that energy shortages have already slashed factory production capacity by 20 to 30 percent. Should global supply chain uncertainty persist, the sector’s viability and broader economic stability face severe jeopardy.
Factories report at least two hours of load shedding during a typical ten-hour workday. Production suffers regular disruption as a result.
RMG factories consume fuel in two principal ways. First, power cuts force reliance on diesel-fired backup generators. Second, when gas pressure falls, captive power systems also switch to generators, deepening diesel dependence.
Many factories run captive generators to sustain normal output, consuming vast volumes of diesel, furnace oil and LPG. With gas supply unreliable, plants burn ever larger quantities of fuel oil as a substitute. A concurrent supply shortage means factories cannot secure adequate fuel stocks. Output consequently falters.
Asked about the situation, Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Bonik Barta: “The extent of disruption varies by zone. Two to three hours of total daily working time are lost. Broadly speaking, production capacity has contracted by around 25 to 30 percent.”
The erosion of garment sector output also surfaced at a roundtable hosted by the Dhaka Chamber of Commerce and Industry (DCCI). At the event, titled “Navigating the Global Energy Shock: Impact on Bangladesh and Way Forward,” DCCI President Taskeen Ahmed said the energy crunch had slashed garment production capacity by nearly 50 percent. He added that cement manufacturing costs had climbed by BDT 25 to 30 per bag, while shipping expenses had risen by an additional $500 to $4,000 per container.
The DCCI discussion further noted that every $10 increase in global oil prices adds $1 billion to Bangladesh’s annual import bill. Should oil breach $120 a barrel, energy-sector outlays would swell by $4 billion to $5 billion a year. Government losses would mount, and industrial production and operating costs would multiply.
The two main garment trade bodies, BGMEA and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), together represent roughly 3,000 active factories. These plants shipped garments worth more than $39 billion to global markets in the 2024–25 fiscal year. Exports have already turned negative in the current 2025–26 fiscal year, weighed down by faltering demand in key markets. Fears are now growing that if the energy shortage persists alongside this unfavourable global backdrop, export figures will sink further.
Bangladesh’s merchandise exports contracted by 4.85 percent in the first nine months of the fiscal year, from July through March. The protracted slide in earnings has tightened the squeeze on ready-made garments. Banks with heavy exposure to textiles and apparel now confront acute concern as growth rates retreat month after month. Entrepreneurs warn that global geopolitics and a domestic energy crunch are compounding anxieties over the industry’s future.
Industry figures trace the export fragility to a cascade of global shocks. Orders began to decrease after the Trump administration’s reciprocal tariffs inflated import costs in the United States and European Union. A recent escalation of the Middle East crisis then scrambled the outlook further. Instability centred on the Strait of Hormuz has driven up global oil prices and throttled supply, inflating production costs inside Bangladesh’s garment factories.
BKMEA President Mohammad Hatem told Bonik Barta: “Factories are now enduring two to three hours of load shedding daily. That has cut the sector’s production capacity by 20 to 25 percent. Exports have been contracting for several months. Although the energy crisis is not yet the main direct cause, it could exact a severe toll going forward.”
Hatem observed that the RMG industry has never before faced such a confluence of pressures. “After Trump’s tariffs, there was a chance that inflation in international markets might ease,” he said. “But the Middle East war has upended all assumptions. With the Strait of Hormuz now verging on closure, the country faces an acute diesel shortage and that’s hampering production.”
Export Promotion Bureau (EPB) data show shipments to the United States — the largest single market for Bangladesh’s exports — fell by 1.10 percent. Exports to Germany dropped 13.54 percent and to the United Kingdom 1.39 percent.
Bangladesh’s industrial sector runs primarily on gas and electricity, with gas fueling roughly 66 percent of power generation. Disrupted LNG imports from the Middle East have sent gas pressure in industrial zones plunging to alarming lows. Petrobangla figures indicate the national grid receives 2.65 billion cubic feet of gas daily, of which 910 million cubic feet goes to power generation. Fertiliser production currently receives virtually no gas; factories get just 70 million cubic feet against a daily requirement of 320 million. Residential consumers, CNG stations, tea estates and other sectors receive the remaining 1.53 billion cubic feet.
The Middle East war continues to strain Bangladesh’ energy stockpiles. With LNG imports from Qatar halted, Petrobangla now procures the fuel on the spot market at more than double the previous price. The government must also import crude oil at steep cost amid obstacles to ensuring regular supply. While no major supply collapse has yet materialised, long queues are already visible at filling stations. Analysts believe that without a swift resolution, the economy — and the export sector in particular — faces mounting strain.