Bangladesh’s energy sector is facing mounting pressure as rapidly rising fuel demand continues to outpace storage capacity, exposing the country to risks amid global market volatility and supply disruptions.
Despite steady growth in consumption, fuel storage infrastructure has seen only marginal expansion in recent years, leaving the system vulnerable to external shocks. Analysts warn that without timely investment in strategic reserves and storage facilities, Bangladesh could face deeper energy insecurity in the coming years.
According to officials and industry data, limited storage capacity prevents the country from fully benefiting from periods of lower global oil prices, while sudden price surges increase the financial burden on the state-run Bangladesh Petroleum Corporation (BPC). This has made the fuel supply system both economically strained and operationally fragile.
Demand rising, reserves lagging
Fuel consumption in Bangladesh has increased sharply over the past few years.
BPC sources show that total usage rose from around 5.5 million tonnes in the 2019–20 fiscal year to nearly 7.5 million tonnes in FY2025–26. Diesel accounts for roughly 70% of total demand, driven by its extensive use in agriculture, transport and power generation.
The remaining 30% consists of petrol, octane, kerosene, furnace oil and jet fuel. Overall fuel demand is growing at an estimated annual rate of around 5%, with projections suggesting consumption could exceed 10 million tonnes within the next five years.
Bangladesh remains heavily import-dependent, sourcing around 92% of its fuel from international markets, while only 8% is produced domestically, mainly from condensate processing.
Limited storage capacity
Experts note that the country lacks a strategic fuel reserve and relies mainly on short-term operational stockpiles.
On average, Bangladesh can store fuel equivalent to less than 40 days of consumption, well below the international benchmark of 90 days or more.
Fuel is stored across 27 depots under the BPC and at the Eastern Refinery, including river, railhead and barge facilities. However, diesel reserves have previously fallen below 10 days of demand, raising concern among policymakers.
Current storage capacity stands at approximately 624,189 tonnes for diesel, along with 53,361 tonnes of octane, 37,013 tonnes of petrol, 144,869 tonnes of furnace oil, 64,118 tonnes of jet fuel, 36,941 tonnes of kerosene and 16,219 tonnes of marine fuel.
Experts call for strategic reserves
Energy experts have stressed the urgent need to establish strategic fuel reserves to strengthen national energy security.
Professor M Tamim, energy expert and Vice-Chancellor of Independent University, Bangladesh, said strategic reserves are essential to withstand global supply shocks.
“A strategic reserve is not for routine use but for emergencies. If supply routes such as the Strait of Hormuz are disrupted, financial capacity alone will not ensure fuel availability,” he said.
He noted that while Bangladesh may not require reserves at the scale of larger economies, a combined buffer of 15 to 30 days could provide critical resilience during crises.
He also cautioned that panic-driven consumption could rapidly deplete reserves and urged the government to develop both oil and LNG storage capacity alongside long-term renewable energy expansion.
Rising import costs amid global volatility
Geopolitical tensions in the Middle East have disrupted global energy markets, driving up prices of oil and gas. Brent crude has risen from around 80 US dollars per barrel to over 100 dollars in recent months before easing slightly.
LNG prices have also surged from about 12 dollars per unit to as high as 28 dollars. As a result, Bangladesh’s import-dependent energy sector has come under increasing financial strain.
Officials estimate that fuel imports are now costing the country an additional Tk1,500 crore per month. A recent Ministry of Finance analysis projects that Bangladesh will require an additional $2.61 billion in foreign exchange to cover rising energy and fertiliser import bills between March and June 2026.
Total import costs for oil, LNG and fertiliser are expected to reach about $5.62 billion, compared to $3.01 billion in the same period last year.
Slow progress on infrastructure targets
Although the government set a target in 2020 to build storage capacity equivalent to 60 days of demand, progress has been slow. Several projects, including storage tanks in Patenga and jet fuel facilities in Parbatipur and Pitalganj, remain incomplete.
Storage facilities developed under the Matarbari Single Point Mooring (SPM) project, with a capacity of around 128,000 tonnes, are yet to be fully operational.
Bangladesh’s only refinery, Eastern Refinery, established in 1963, has a capacity of around 1.5 million tonnes annually. With national demand now at around 7.5 million tonnes, most fuel must be imported in refined form, increasing overall costs.
Government stance
Monir Hossain Chowdhury, joint secretary at the Energy Division, said the government is focusing on immediate supply stability while considering long-term expansion plans.
“Once the current situation stabilises, the government will seriously consider increasing storage capacity. The immediate priority is maintaining supply and managing the ongoing situation,” he said.
He added that recent global crises, including the COVID-19 pandemic and geopolitical tensions, highlight the need to strengthen energy resilience.
In a briefing on 15 April, he said there is currently no diesel shortage in the country. As of 14 April 2026, diesel stock stood at 101,385 tonnes, while petrol and octane reserves were 18,211 and 32,000 tonnes respectively. He added that pipeline supply is sufficient to cover nearly two months of demand.
He also confirmed that a major shipment has recently arrived at Chattogram Port, including 109,000 tonnes of diesel and 27,000 tonnes of octane, the largest consignment since the crisis began, expected to ease supply pressure and support uninterrupted power generation and industrial activity.
Courtesy: Daily Sun.
Bd-pratidin English/TR
