The International Monetary Fund issued a chilling warning that oil and gas prices might rise 100 to 200 percent, respectively, in 2026-2027 if the US-Israel and Iran war continues with the current severe economic fallout. Bangladesh sourced nearly half of its LNG from the Middle East in 2025. The implications are not just abstract projections but an imminent economic crisis. Whenever we see any war, we face that kind of severe crisis. The latest energy shock is the second in just four years, following the devastating price hike caused by Russia’s invasion of Ukraine in 2022. Yet Bangladesh remains dangerously tied to imported fossil fuels, spending approximately Tk 400 billion on LNG while devoting less than 2 percent of that sum to renewable energy development. In 2025, Bangladesh imported over 108 LNG cargoes, the highest in its history. The International Energy Agency has warned that this growing dependence could further weaken the country’s economy and energy security in the next decade, calling the current LNG-dependent model “economically and environmentally unsustainable”. That’s why the International Energy Agency also sounded an alarm in the recent World Energy Outlook 2025 that cannot be ignored, projecting that Bangladesh will become South Asia’s second-largest LNG importer by 2035. This is not energy security; instead, we can say it’s a gamble with the nation’s economic future.
By Imran Hossain
The recent closure of the Strait of Hormuz, through which 20 percent of global oil and LNG pass, has laid bare this vulnerability. More than half of Bangladesh’s LNG supplies transit this checkpoint, meaning any sustained disruption would trigger intense global competition, with Asian buyers forced to outbid European markets or dwindling cargoes. The IMF’s adverse scenario predicts oil at $100-125 per barrel and gas prices rising 160-200 percent. For a nation already struggling with foreign currency reserves, this is devastating.
We, Bangladeshi, can also produce renewable energy to meet our energy demand. We already have proof that Solar Power works. Amid this US-Israel and Iran war crisis, some factories are thriving. Ha-Meem Group installed 12 megawatts of solar capacity on its rooftops for Tk54 crore and now keeps production lines humming through load-shedding while selling surplus power back to the grid. The Korean Export Processing Zone in Chattogram operates a 44-megawatt solar plant that meets peak demand and shields factories from diesel shortages. These are not pilot projects, but proven models. However, while renewables account for 51 percent of India’s electricity generation and 46 percent of Pakistan’s clean energy share, Bangladesh’s renewable capacity remains stuck at merely 4.5 percent of installed power. This gap is not technological. It is institutional, financial, and political.
We can take lessons from our neighboring countries in South Asia and Southeast Asia. One of them, Pakistan, as the country’s solar boom is shielding it from the worst of the Iran war crisis. Pakistan, hit by the same 2022 energy shock, launched a consumer-led solar revolution. Rooftop solar generation is now expected to exceed daytime grid demand in Lahore and Faisalabad next year, with the country becoming the world’s third-largest solar panel importer. Pakistan is now renegotiating LNG contracts with Qatar and canceling cargoes because solar has structurally reduced demand. Vietnam’s cumulative solar capacity reached over 19 GW by the end of 2025, transforming the country into a top 10 global solar panel producer. India added a record 44.5 GW of renewable capacity in 2025, with solar alone surging past 132 GW. These nations did not wait for energy wars to end. They built resilience.
The path forward is feasible for us. Bangladesh’s newly approved Renewable Energy Policy 2025 offers a 10-year corporate tax exemption for renewable energy producers and a national rooftop solar program targeting 3,000 MW of capacity. The government has signed PPAs for 523 MW of grid-connected solar projects and is planning a 442 MW facility near Rampal. Chinese firms like Longi are setting up local manufacturing, which could dramatically lower panel costs. But policy on paper is not power in the grid. The country’s utility-scale renewable project pipeline is nearly empty, and financing challenges threaten to delay execution. The gap between the 5,000 MW of potential rooftop solar capacity identified by IDCOL and the current reality underscores a failure of implementation, not ambition.
Now we are in a position of an existential choice because the RMG sector, Bangladesh’s economic backbone, faces a 17 percent EU carbon tax burden after 2030 if it fails to decarbonize. Meanwhile, every delay locks the nation into costly long-term LNG contracts that drain foreign reserves and expose households to volatile global prices. So, Bangladesh has a choice to continue paying the fossil fuel premium in blood and treasure or embrace the renewable transition that geopolitics has already made inevitable. The IMF scenarios are warnings, not foretelling. But they become self-fulfilling if our country chooses inertia over action. So, we can’t delay transitioning to renewable energy in diverse sectors rather than being dependent on fossil fuels for the energy demand, and the easiest source for renewable energy is the sun, which is free for us; now it’s time to use it.
Imran Hossain, Lecturer, Department of Business Administration, Bangladesh Army International University of Science and Technology (BAIUST), (MBA), (BBA), University of Rajshahi.
