Iftekhar Rahman
Verdant Global
Wahidul Islam’s recent article in The Oniket Bulletin, ‘The Hidden Bottleneck: How Credit, Banking, and Legal Gaps Are Choking Bangladesh’s Gas Imports’, makes an important case that sovereign credit deterioration, banking weakness and gaps in trade-finance architecture have constrained Bangladesh’s ability to secure LNG.1 That diagnosis matters, but finance is one transmission mechanism within a wider structural crisis. Bangladesh entered 2026 with declining domestic production, rising import dependence, concentrated LNG infrastructure, Gulf supply exposure and procurement arrangements under severe pressure.
The policy response therefore has to operate on two horizons. Exploration, new terminals and refinery investment can strengthen future resilience, but households, industry and power generation need adequate gas now. The immediate challenge is to finance, procure, receive and regasify sufficient LNG at tolerable cost while longer-term capacity is built.
Banking Weakness Has Identifiable Governance Roots
S&P Global Ratings revised Bangladesh’s sovereign outlook to negative in July 2026 while affirming its B+/B ratings, citing banking-sector weakness alongside external and fiscal risks.2 Moody’s had already downgraded Bangladesh to B2 with a negative outlook in November 2024.3 Asset-quality reviews of five crisis-hit Islamic banks later brought into the merger process reported non-performing loan ratios of roughly 49% to 98.5%,4 while the Anti-Corruption Commission filed a major case in November 2025 alleging Tk10,479.62 crore in embezzlement and money laundering involving Islami Bank and S Alam Group-related parties.5
These developments illuminate governance failures underlying parts of the banking crisis, but they do not establish that those distressed banks financed Petrobangla’s LNG purchases. Petrobangla already benefits from a $350 million World Bank-backed guarantee facility supporting LNG payment security.6 The challenge is therefore reliable, competitively priced trade finance alongside wider banking reform.
The Deeper Vulnerability Is Import Dependence
Domestic gas production fell from about 27.2 billion cubic metres in FY2018-19 to 19.6 billion in FY2024-25, a decline of roughly 28%, while LNG imports rose 143% from 3.28 to 7.98 billion cubic metres.7 LNG has therefore moved from supplementary supply to a critical component of energy security. Any disruption in financing, shipping, procurement or terminal operations now has much larger economic consequences.
A Geopolitical Shock Exposed Concentration Risk
The Middle East conflict turned that vulnerability into an acute crisis. QatarEnergy reduced scheduled 2026 deliveries to Bangladesh, while disruption around Ras Laffan and the Strait of Hormuz pushed Petrobangla further into the spot market.8 By 3 September, Bangladesh had approved a spot cargo above $28/MMBtu, compared with roughly $10-$12/MMBtu before the conflict intensified.9 Diversifying suppliers and loading points outside the Gulf should therefore be treated as an energy-security requirement, not merely a commercial preference.
Pricing Discipline Can Work
The Gunvor negotiations show why commercial scrutiny matters. An initial proposal at JKM plus $0.875/MMBtu was returned for reconsideration; Petrobangla subsequently negotiated the premium to JKM plus $0.0875/MMBtu before the government approved a 117-cargo arrangement.10 This does not prove systematic overcharging, but it demonstrates the value of benchmark comparison, competitive tension and documented price challenge.
Two Terminals Are Not Redundancy
Bangladesh’s LNG gateway depends on two FSRUs off Moheshkhali. A July incident at the Excelerate-operated terminal initially removed about 450 MMcfd from the grid,11 and an August Aramco cargo was denied access because of safety and compliance concerns and had to be replaced.12 Losing one terminal can therefore remove a material share of national supply. Clear vessel-acceptance protocols, contingency arrangements and credible backup capacity are essential.
The Immediate Gap Cannot Wait
The government is pursuing necessary longer-term measures. Thirty wells under a 150-well programme have been completed, adding about 140 MMcfd, while further exploration and offshore bidding are under way.13 A proposed additional FSRU at Kutubjom is expected to begin supplying gas only around December 2028, with other floating and land-based terminal options also being studied.14
The approximately $1 billion IsDB agreement signed on 3 September to expand Eastern Refinery strengthens longer-term fuel security, but it is not an LNG-import facility and the project is scheduled for operation around 2030.15 More immediately relevant is the $3.3 billion FY2026-27 financing programme with ITFC, an IsDB Group member, covering petroleum products, LNG and fertiliser imports.16 Petrobangla also expects ten LNG cargoes in September, eight of which were confirmed by 1 September.17
Those steps are necessary because the social and economic cost is immediate. The government has acknowledged continuing disruption to households, industry and power generation while the gas system remains below full normality.15
Procurement Must Be Fast and Accountable
Financing capacity does not automatically translate into timely cargo availability. On 1 July, the Cabinet Committee on Government Purchase approved two spot LNG cargoes worth Tk1,437.55 crore under the Public Procurement Rules 2025.18 That oversight is necessary, but emergency energy procurement also needs a mechanism capable of acting within market windows measured in hours, not weeks. A defined financial threshold could be delegated to the Petrobangla board for urgent purchases, subject to mandatory post-transaction Cabinet ratification, benchmark disclosure and independent audit. This would preserve accountability while reducing the risk that procedural delay itself becomes a supply-security constraint.
Conclusion
Credit and banking weakness are genuine parts of Bangladesh’s LNG problem, but financing alone cannot create domestic gas, terminal redundancy or rapid operational response. Near-term policy must secure cargoes, maintain trade-finance capacity, diversify suppliers and maximise existing terminal availability while protecting households and productive industry. In parallel, exploration and infrastructure investment must reduce the structural dependence that made the crisis so severe.
Financing can help a cargo arrive. Resilience determines whether the system can withstand the next shock.
References
1. Islam, W. (2026) ‘The Hidden Bottleneck: How Credit, Banking, and Legal Gaps Are Choking Bangladesh’s Gas Imports’, The Oniket Bulletin, 3 September.https://bulletin.oniket.org/trade-commerce-industry/the-hidden-bottleneck-how-credit-banking-and-legal-gaps-are-choking-bangladeshs-gas-imports/editor/
2. S&P Global Ratings (2026) ‘Bangladesh Outlook Revised to Negative on Sustained Economic Risk; B+/B Ratings Affirmed’, 27 July. https://spratings.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3600834
3. The Daily Star (2024) ‘Moody’s Downgrades Bangladesh’s Ratings to B2, Changes Outlook to Negative’, 18 November. https://www.thedailystar.net/news/bangladesh/news/moodys-goes-negative-bangladesh-3756021
4. The Business Standard (2025a) ‘Five-way Merger to Create Nation’s Largest Bank by Assets’, 16 September. https://www.tbsnews.net/economy/banking/bb-appoint-administrators-merger-five-crisis-hit-islamic-banks-1238051
5. The Business Standard (2025b) ‘ACC Files Its Largest-ever Case against S Alam over Tk10,480cr Embezzlement, Laundering’, 9 November. https://www.tbsnews.net/bangladesh/corruption/acc-file-record-case-against-s-alam-chairman-66-others-embezzlement-laundering
6. World Bank (2026) ‘World Bank Support to Help Navigate Fuel Market Volatility in Bangladesh’, 18 May. https://www.worldbank.org/en/news/factsheet/2026/05/18/world-bank-support-to-help-navigate-fuel-market-volatility-in-bangladesh
7. The Daily Star (2026a) ‘The Buildup to Bangladesh’s Energy Crisis’, August. https://campaign.thedailystar.net/energy-crisis/
8. The Daily Star (2026b) ‘Bangladesh Looks for Alternative LNG Sources as QatarEnergy Cuts 2026 Deliveries’, 6 July. https://www.thedailystar.net/news/environment/natural-resources/energy/news/bangladesh-looks-alternative-lng-sources-qatarenergy-cuts-2026-deliveries-4217386
9. The Daily Star (2026c) ‘Bangladesh Paying Near-peak Prices for LNG’, 3 September. https://www.thedailystar.net/news/bangladesh/news/bangladesh-paying-near-peak-prices-lng-4263581
10. The Business Standard (2026a) ‘Govt Secures 90% LNG Premium Cut from US Firm Gunvor, Approves 117 Cargoes’, 12 August. https://www.tbsnews.net/bangladesh/bangladesh-import-117-lng-cargoes-us-firm-until-2038-1513206
11. The Business Standard (2026b) ‘Technical Fault at Moheskhali LNG Terminal Cuts Gas Supply to National Grid by 450 MMcfd’, 21 July. https://www.tbsnews.net/bangladesh/energy/technical-fault-moheskhali-lng-terminal-cuts-gas-supply-natl-grid-450-mmcfd
12. The Business Standard (2026c) ‘Vessel with 61,000 Tonnes LNG Denied Berth on Compliance Issue’, 17 August. https://www.tbsnews.net/bangladesh/petrobangla-rejects-saudi-aramco-lng-cargo-over-compliance-issue-replacement-cargo-arrive
13. Bangladesh Sangbad Sangstha (2026a) ‘Govt Implementing Integrated Action Plan to Overcome Energy Crisis: PM’, 2 September. https://www.bssnews.net/news-flash/420390
14. Bangladesh Sangbad Sangstha (2026b) ‘Govt Intensifies Gas Exploration, Plans to Curb System Loss: Minister’, 2 September. https://www.bssnews.net/js-session/420443
15. Bangladesh Sangbad Sangstha (2026c) ‘Power, Energy Situation to Improve within Two Weeks: Amit’, 3 September. https://www.bssnews.net/news/420829
16. International Islamic Trade Finance Corporation (2026) ‘Bangladesh Signs $3.3b Annual Financing Programme with ITFC’, 6 July. https://www.itfc-idb.org/news-events/news/bangladesh-signs-%243-3b-annual-financing-programe-with-itfc
17. Bangladesh Sangbad Sangstha (2026d) ‘Govt Expects 10 LNG Cargoes to Arrive in September: Official’, 1 September. https://www.bssnews.net/special-stories/420121
18. The Business Standard (2026d) ‘Cabinet Body Clears Procurement of 2 LNG Cargoes’, 1 July. https://www.tbsnews.net/bangladesh/cabinet-body-clears-procurement-2-lng-cargoes-1477136
