Rice and wheat are strategically vital to the country’s food security, and government stocks of the two grains currently stand at about 2.4 million tonnes. That reserve helps the government to underpin food security, cushion the impact of emergencies and steady the market.

No comparable strategic buffer exists for LPG and LNG however to cushion international shocks. Bangladesh has failed to build adequate emergency storage or the infrastructure needed to withstand a global shock or a sudden disruption.

Energy experts regard reserves of liquefied petroleum gas (LPG) and liquefied natural gas (LNG) as particularly important, both of which the country imports. Without a buffer against supply crises, the economy and consumers are left to carry the risk of volatility in the global market.

Fuel products are strategic commodities for any country, experts note, and Bangladesh depends on international markets for many of them. Storage infrastructure at home is therefore essential. Successive governments have spoken of building LNG and LPG storage capacity, but none has done so. The country is absorbing the current turmoil in world markets through higher prices at home. Had one and a half to two months’ worth of LNG and LPG been held in reserve, there would have been room to ride out supply disruptions and price rises.

For Bangladesh’s energy sector, the most acute crisis is now in LPG. Government data show that imports have been made according to demand, yet the market is facing an acute shortage. Operators and retailers have raised various complaints over the crisis, while experts and traders identify the absence of state reserves as a major reason.

During the previous Awami League government, there were plans to build 100,000 tonnes of LPG storage capacity. Bangladesh Petroleum Corporation (BPC) spoke for years about developing the infrastructure, but it was never built. The state-owned LP Gas PLC was even allocated land at Karnaphuli in Chattogram, Mongla in Bagerhat and Matarbari in Moheshkhali, yet no work has begun.

Had the capacity been in place, state reserves could have been released to private operators during a crisis and the LPG shortage would have eased in the normal course of the market. Private importers and suppliers would not have had the opportunity to control 98 percent of the market.

LP Gas PLC is now working on building the country’s LPG storage capacity and has already begun developing storage with an annual throughput of 100,000 tonnes at Mongla.

Asked about the project, the company’s managing director, Md Amir Masud, told Bonik Barta: “We are building LPG storage infrastructure at Mongla in Bagerhat with a capacity of 100,000 tonnes a year. The feasibility study is complete. The project will have 8,500 tonnes of storage capacity there. Work is underway on how to finance it from BPC and the marketing companies — Padma, Meghna and Jamuna — without taking money from the government. Alongside that, work is also ongoing on a channel and import-based infrastructure at Matarbari in Moheshkhali. The process of finalising these matters quickly is underway.”

BPC sources said the corporation has drawn up plans for a large LPG terminal at Moheshkhali’s Matarbari to handle state LPG imports. The project was to begin in 2024 and be completed by 2028. Talks with BPC officials indicate no ground-level progress has yet been made. The construction plan describes it as a refrigerated mother terminal, from which LP gas would be sold in bulk to LPG companies. Its operating capacity is put at about 1 million to 1.2 million tonnes a year.

For government LPG imports and the setting up of an LPG plant, a pre-feasibility study is underway, with BPC and Petrobangla in the process of signing an agreement with Malaysia.

BPC as a state entity had taken the initiative to import LPG itself alongside the private operators, promising to import the product on its own account and supply it to them. Private operators had also expected to buy LPG from BPC this month and release it into the market. Yet despite repeated attempts, BPC has been unable to import LPG.

The price of a 12 kg LPG cylinder rose by BDT 252 on October 4. The Bangladesh Energy Regulatory Commission (BERC) said the adjustment reflected higher global prices for the product and higher shipping costs. Questions remain, however, over when the Strait of Hormuz will reopen, how long the disruption at Bab al-Mandeb will last and how long price increases can keep the market steady if the crisis does not ease.

The same problem exists with LNG. Bangladesh lacks LNG storage capacity and therefore relies directly on the spot market and long-term contracts. A rise in global LNG prices or the failure of a contracted cargo to arrive can trigger a serious crisis in the gas sector, with effects on industry, power generation and every other part of the economy.

As domestic gas supplies have tightened, a large share of household consumption is shifting to alternative fuels. Households, CNG and autogas users and a substantial part of industry are shifting to LPG, of which the country now uses more than 150,000 tonnes a month.

The natural gas shortage has driven many factories to convert as well, and traders put industrial LPG demand at 50,000 tonnes. Consumption is set to grow further. Keeping production steady, stakeholders argue, will require not only LPG imports but storage infrastructure.

The absence of LNG storage facility creates two problems. When LNG cargo imports are disrupted, terminals have to remain idle, but substantial costs still have to be paid for them. Severe weather that prevents ships from berthing forces Petrobangla to suspend LNG supplies three or four times a year. A land-based LNG terminal could have avoided such disruption. In many cases, holding at least one or two months’ cover would have made it possible to absorb the higher costs without raising prices.

Professor M Tamim, an energy expert and vice-chancellor of Independent University, Bangladesh, told Bonik Barta: “A buffer stock of any imported product is extremely important. It plays a major role in managing the market and keeping supply normal. When we talk about storage infrastructure in this country, LPG and LNG terminal storage systems are of the utmost importance, because these are strategic products that have to be imported from the world market.”

Noting a tendency to hoard along the local supply chain during the current LPG crisis, Professor Tamim added: “Everyone can see the CP price in the global market now. So when prices keep rising, suppliers gain control of the stock in the market. Had the government had storage, it could have increased LPG supply from there and brought the market under control. The same applies to LNG. Building at least one month’s storage would have played a major role during periods of conflicts, high prices, or simply in keeping supply normal.”

Import-dependent developed economies adopt reserve strategies to deal with emergency energy crises. They have been better able to absorb price rises and supply disruptions during the Middle East crisis.

Japan has built a carefully planned energy security system for exactly that purpose. Dependent on Middle Eastern crude, it has developed a robust three-tier storage system and, according to a Nikkei Asia report, that reserve strategy has been highly effective in keeping its market stable through geopolitical tension in the Strait of Hormuz and the Red Sea.

China, Asia’s largest importer, does not rely on storage alone for LPG and LNG but has built energy security arrangements at several levels. The Chinese government in 2024 brought state and private production capacity and storage sources within a single framework, developing underground storage as a seasonal reserve. For LNG, it has developed not only terminal storage systems but also coastal terminals, emergency supply arrangements and regional LNG tank systems.

For the United States, the main instrument is the Strategic Petroleum Reserve, the world’s largest emergency stockpile of crude, established in 1975 after the energy crisis of the 1970s. With the current war with Iran and instability in global markets, Washington is adopting a new stockpiling strategy. It has released record volumes of oil from the reserve to cushion the shock of global fuel prices. Under the arrangement, oil companies must return 1.25 barrels for every barrel supplied after a year or a set period, so the reserve is replenished without taxpayer money. The government is also lending oil from its stocks to private companies for fixed periods to supply the world market.

Many countries use several measures to secure emergency LNG supplies, including terminal storage, underground gas storage, storage at floating terminals and multiple import suppliers. For LPG, they have built large-scale storage and bulk tank capacity, port-based storage, mandatory minimum stocks for importers, emergency release of government reserves and arrangements across multiple ports and river ports.

Bangladesh, meanwhile, is having to buy fuel on the global market at steep prices, particularly fuel oil, LNG and LPG. Importing these strategic energy products is creating financial and supply-chain pressures for the country.

The country has 60 days of fuel oil storage. The current government has set out a plan to raise that to 90 days. Under BPC’s plan, storage is to reach 71 days by December 2026.

LNG is critical to the country’s gas sector. Bangladesh is now importing the fuel at three times the price it paid in February, and the government is already carrying a heavy subsidy. Should prices hold at current levels, LNG imports could cost more than BDT 900 billion in 2026, according to Petrobangla officials.

Azam J Chowdhury, an industrialist and chairman of East Coast Group, told Bonik Barta that the private sector had also made proposals for fuel storage infrastructure.

“We (East Coast Group) have submitted three proposals on LPG, LNG and hydrogen. Why they have been stuck for three or four years is unclear. Storage capacity in the energy sector is a big advantage in a crisis. If this infrastructure is built near a deep seaport, it opens up a great deal: price control, supply management, the ability to import large vessels. Energy is a strategic product, a matter of national interest, and the government needs to work on it as a priority.”

Leading private companies have spoken at various times about the importance of building LPG storage capacity. Their argument is that if storage is developed and LPG can be supplied at affordable prices, many operators will come forward.

Fresh LPG’s chief marketing officer Abu Sayed Raza told Bonik Barta: “Private operators are supplying LPG to the domestic market. If the government can build the infrastructure, the private sector will be able to take advantage of it. It would be a particular help in managing supply. LPG storage has been under discussion for a long time. It needs to happen. It would strengthen the country’s energy security.”

LNG imports are expected to rise further as domestic gas supplies tighten. The need to build LNG storage capacity to meet growing gas demand is set out in the Integrated Energy and Power Master Plan (IEPMP) 2023. The plan projects annual capacity at LNG import terminals could exceed 30 million tonnes after 2050.

The earlier Power System Master Plan (PSMP) 2016, prepared for the power sector, noted the gradual decline in domestic fuel reserves and production, and highlighted the need for fuel diversification and energy infrastructure. It also recommended against relying on gas alone for power generation.

These master plans for the power and energy sectors stress the construction of energy infrastructure, diversified sources and storage capacity. In practice, however, past governments did not prioritise storage. They instead relied on imports and direct supply to the grid to keep the situation normal. The risks of global fuel imports, conflicts, high prices and the steady depletion of domestic fuel were not given due weight.

BERC sets LPG prices in the domestic market. Asked whether the commission can advise the government on building LPG storage alongside its pricing role, officials declined to comment directly.

BERC chairman Jalal Ahmed told Bonik Barta that the government “can put an emergency reserve system in place for fuel oil and LNG”, although this could increase “inventory costs”.

The sitting government has plans to build LPG and LNG storage infrastructure. Building such infrastructure to stabilise supply and keep prices in check is a major priority under its energy security agenda.

Iqbal Hassan Mahmood, the minister for power, energy and mineral resources, could not be reached for comment yesterday.