The former interim government repealed a special act for the power and energy sector, triggering the cancellation of 31 renewable energy projects, a floating liquefied natural gas terminal and long-term gas supply contracts.
While the ousted Awami League regime bears primary responsibility for the country’s energy vulnerability after years of corruption, irregularities and systematic looting, sector insiders say hasty reform decisions by the interim administration deepened the turmoil.
The scrapped renewable projects were expected to add at least 1,000 megawatts to the grid in 2026, while the third floating LNG terminal — awarded to a private company — was due to start operating in October. Energy experts say proceeding with the deals would have largely contained the ongoing gas crisis and cushioned widespread power cuts.
While the former interim government set up multiple commissions to overhaul state bodies, it created none to investigate 15 years of alleged graft in power and energy. The administration prioritised legal and constitutional reforms alongside political consensus-building, leaving the country’s crucial energy sector neglected.
Several sources claimed the Bangladesh Nationalist Party also offered no specific policy proposals during the interim period. They believe the BNP lacked both a clear understanding that it would have to tackle a severe energy crisis if elected and any advance planning to deal with it.
Bangladesh is now navigating a crippling gas shortage, compounded by an operational fault at an existing LNG terminal. The deficit has choked factories, power plants, households and vehicle-refuelling stations, extending far beyond energy supply to strain the wider economy.
Business leaders and sector officials warn that power and fuel shortages are disrupting factory output and eroding export competitiveness by inflating production costs. High import bills for gas, oil and coal are putting heavy pressure on foreign exchange reserves and the government budget, feeding through to higher subsidies, electricity tariffs and general inflation. Unreliable energy supplies are stalling fresh investment and employment. Rising costs for electricity, transport and basic goods are hitting middle- and low-income households as well, threatening long-term economic growth and social stability.
The country faces a baseline daily gas deficit of 1.2 billion cubic feet. To bridge the gap, the ousted Awami League administration had contracted a third floating import terminal with a capacity of 600 million cubic feet a day.
Following the Awami regime’s fall, the subsequent interim government repealed the special energy supply provisions and cancelled all associated deals, formally scrapping the terminal contract on October 7, 2024.
The floating LNG terminal was due to begin commercial operations in October this year, alongside a 15-year supply deal with Petrobangla set to start LNG imports in June — an agreement that has also been cancelled. Energy experts say the terminal would now be near commissioning had the contract stood, noting that the interim government made no effort to build a permanent LNG terminal.
Converting an LNG carrier into a floating storage and regasification unit takes 12 to 18 months. Experts argue the interim administration, even after cancelling the contract with a private company to build the floating terminal, could still have secured a replacement unit within its tenure under an alternative arrangement, yet made no attempt to do so.
While specialists acknowledge the interim government reduced the sector’s external liabilities, they contend that revoking several contracts under the special provisions triggered a wider crisis. Rather than renegotiate terms to preserve foreign investment, gas supplies and renewable capacity, the administration opted for total cancellation — leaving the resulting supply deficit for the current government to resolve.
“The energy sector’s current crisis is the legacy of successive governments, not an overnight development,” Professor M Tamim, an energy expert and vice-chancellor of Independent University, told Bonik Barta. “Several decisions by the interim government did more damage than good. Cancellation of renewable power projects and the scrapping of the floating LNG terminal deal severely harmed both sectors. Scope existed to renegotiate rather than revoke them. Had the parties reached terms, many short-term supply difficulties could have been resolved. Instead, those choices set the energy sector back. I see no grounds to blame the current government for the current crisis in the energy sector.”
The interim administration held power for 18 months following the Awami League’s fall. Although its Energy Adviser Muhammad Fouzul Kabir Khan pledged sweeping reforms, his initiatives failed to curb the power sector’s financial losses. Promised efforts to reset electricity tariffs, lower LNG import costs and cut capacity charges never materialised. Instead, losses widened at the Bangladesh Power Development Board, the country’s sole electricity buyer. Foreign investors abandoned renewable energy, domestic gas output stagnated and mounting bureaucratic hurdles delayed key projects.
Industry stakeholders say the renewable energy sector took the heaviest hit during the interim period. Authorities cancelled 31 projects with a combined capacity of 3,000 megawatts without explanation, prompting most of the participating Chinese investors to withdraw. Sector figures warn that freezing these ventures sent a chilling signal to the broader foreign investor community.
“The former interim government inflicted the heaviest damage on efforts to expand renewable capacity,” Mostafa Al Mahmud, president of the Bangladesh Sustainable and Renewable Energy Association and chief executive of G-Tech Solution Ltd, told Bonik Barta.
He added: “Upon taking office, it unilaterally scrapped 31 projects, 28 of which relied on foreign capital — predominantly from China. Those cancellations left foreign investors deeply disheartened and shredded the sovereign guarantees that underpin investment credibility. Had the projects not been cancelled, at least 1,000 megawatts would have reached the grid this year, substantially easing today’s power cuts.”
The interim government took no decisive action to reverse the investment paralysis and declining domestic gas production inherited from the Awami League era. The newly elected BNP government then assumed office just before conflicts erupted in the Middle East, exposing Bangladesh to a volatile global energy market. Disruptions to long-term LNG imports, soaring spot prices, fuel financing shortages and inadequate import infrastructure swiftly pushed the country’s gas sector into acute crisis.
Foreign investment, domestic manufacturing and new industrial gas connections all depend on reliable power and gas supplies — without which, experts warn, sustainable economic growth is impossible. Government policymakers concede the predicament was years in the making. They acknowledged that systematic looting and haphazard management saddled the sector with heavy liabilities and left it deeply fragile.
“We can’t turn around the ongoing gas crisis overnight,” Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood told Bonik Barta. “We have sought help from several countries and received assurances. We are working to pull the sector out of this mess.”
The minister noted that the former interim government had cancelled a large number of power and energy projects. “Had those remained, we would at least have had something to work with. We are trying to resolve power and energy projects as quickly as possible so work can begin.”