The Current LPG Crisis in Bangladesh: Underlying Causes and Government Responses

Design: Mohammod Tashin

AKM Fazlul Hoque is Joint Secretary (Operation-1 Branch) at the Energy and Mineral Resources Division.  In this interview, he discusses “The Current LPG Crisis in Bangladesh: Underlying Causes and Government Responses,” outlining structural supply constraints, global market pressures, and the policy measures undertaken to stabilize the market.

Host: Tasfiah Tarannum Rodoshi, Co-Head, Department of Public Relations
Interview date: 3 February 2026

According to government data, approximately 152,418 metric tons of LPG were imported during the July–December period, which is significantly higher than the country’s total demand. Then why are consumers still facing shortages? What is your opinion on this?

First of all, it would be wrong to blame or identify any single indicator or problem as the sole cause of the LPG crisis. Many factors are responsible for this. We have tried to analyze why this crisis emerged and what factors are causing it, since we need to work with this data.
We all know that 98.67% of the LPG sector in our country is under the control of the private sector, while only 1.33% is controlled by the government through a small company. Looking back, after August 5, 2024, many industrialists who were close to the fallen government either left the country or went into hiding. At the same time, due to national and international financial crises, opening Letters of Credit (LCs) became difficult for them.
When opening an LC, one must specify for whom and by whom imports are being done. This has become a major issue, as many companies are unable to open LCs.

Sir, can you elaborate further on this issue? How is it affecting our LPG supply?

At present, there are around 40 LPG operator companies in the country. Among them, only 15 companies have imported LPG. Among the remaining companies, eight have not imported at all in 2025. So, among roughly 32 companies, only 15 are importing in some way. Whether due to reluctance or incapability, their absence in import activity has created supply shortage. LC-related complications have therefore become a major challenge, contributing to shortages in the market.

The global supply situation has further intensified the LPG supply shortage problem. China and India are major players in LPG imports worldwide. Due to crises involving Iran, both countries jumped to the spot market, where immediate demand fulfillment is more important than price. China and India have huge populations, coupled with a huge demand and usage of LPG. While a Bangladeshi operator might buy 5,000 metric tons, or may be100,000 metric tons at once. Through aggressive purchasing, China and India dominate the LPG market, making it harder for smaller buyers like Bangladesh to secure LPG supply.
After August 5, imports were mainly handled by only six large companies. Among the 15 companies, some imported while others did not. So, two key issues became clear: LC related problems and global supply disruptions linked to the Iran crisis.
Additionally, US sanctions on 29 LPG vessels disrupted shipping. Bangladesh lacks large LPG vessels, and operators usually import in small shipments of only 2,000–10,000 metric tons. As a result, vessel restrictions prompted additional delays, as seen by imports of just 6,600 metric tons in the first three days of February 2026.

Sir, since you've mentioned the LC complications. Why do you think the govt is unable to regulate this efficiently?

The LPG sector is governed through multiple regulatory bodies, which creates coordination challenges. According to LPG Policy 2014, importers must obtain approval from the department of Explosives authority for each consignment. BERC (Bangladesh Energy Regulatory Commission) provides licenses for distribution, bottling, and storage. Meanwhile, authorization to bring LPG into the country comes from the Energy and Mineral Resources Division.
This multi-layer regulatory structure creates challenges. Ideally, regulatory and executive responsibilities should be streamlined. Since BERC regulates, sets prices, and issues licenses. Coordination challenges remain unless relevant Acts and Rules are amended or responsibilities reorganized.
Since the government controls only 1.33% of the sector, it cannot quickly inject LPG supply into the market during shortages of storage capacity. Like electricity, government share should be much larger, allowing intervention during shortages, but this is not yet possible in LPG sector.

By this time, we can understand that this crisis has multifaceted causes. Are there any other factors further contributing to this issue?

Yes, several additional factors are at play. Importing LPG also takes time. If supply is required in February 2026, LCs must be opened in November or December 2025. From supplier coordination to shipping, vessel preparation, storage, bottling, and distribution, this full cycle takes at least 45 days. This means that even if the government decides to intervene by importing immediately, the lack of storage, bottling capacity, and distribution networks prevents quick intervention.
At the same time, declining natural gas reserves have pushed industries to some extent, to shift from pipeline gas to LPG, creating sudden and unplanned demand. 
Demand forecasting has also changed. Previously, monthly demand averaged around 128,000–130,000 metric tons. But recently, January demand reached 167,000 metric tons, February demand is projected at 184,100 metric tons due to national elections and Ramadan, and March demand is around 164,500 metric tons. LPG demand is growing rapidly, and seasonal or national events further increase consumption. Therefore, planning must begin earlier especially for LPG import. Combining all these factors, it can be said that market demand was not adequately fulfilled due to multiple challenges. However, efforts have been taken to overcome this predicament. The Energy and Mineral Resources Division, Bangladesh Petroleum Corporation, and the Bangladesh Energy Regulatory Commission (BERC) are all taking separate initiatives, and the situation is expected to improve in near future.

When the shortage first appeared, what immediate actions did the government prioritize to prevent a prolonged crisis?

This is a very good question. In reality, not only ordinary people but even many people in society do not know what kinds of steps have actually been taken by the Energy and Mineral Resources Division. 

• First, When early signs of disruption appeared, we hold a meeting on December 4, 2025 with the LPG Owners’ Association of Bangladesh (LOAB), as the sector is largely dominated and managed by the private sector. Based on their inputs, immediate measures were taken to stabilize the market.
  
• Second, import restrictions were relaxed. Some companies that previously imported limited volumes were allowed to increase their import capacity, For example, if a company previously imported around 150,000 metric tons, now it is allowed to increase capacity to 300,000 metric tons if they apply so to the Energy and Mineral Resources Division. 
  
• Third, to address the LC problems, we formally contacted the Bangladesh Bank, and thus the Bangladesh Bank extended time to 270 days, making imports easier and reducing the financial burden on operators.
  
• Fourth, to lessen consumers burden, we proposed tax relief to the NBR, which would lower import-stage VAT from 15% to 10% and eliminate the 7.5% production-stage VAT, considering LPG as a green fuel.

Additionally, since government participation in LPG supply is very limited, the government decided that Bangladesh Petroleum Corporation (BPC) would import LPG. Therefore, consumers could receive LPG at the price fixed by BERC. A meeting on December 7 finalized that the government would import LPG to cover supply gaps. Even if the government imports 20,000–30,000 metric tons, it can help reducing LPG crisis intensity.
BERC also conducted several meetings with operators and distributors facing LC issues. To overcome storage and bottling constraints, private operators’ facilities may be  utilized for government imports. This prevents vessels from remaining idle and keeps supply flowing.

Compared to early January, what measurable improvements have you observed in supply and market stability?

While we cannot say the problem is completely solved, the severe crisis seen in the first and second weeks of January  have eased somewhat. Now we are monitoring imports more closely. We are receiving direct port data from NBR, and we also have access to relevant monitoring software. Information about LC openings is now reaching us every 15 days, allowing us to understand supply trends earlier.
Private sector operators are also cooperating, especially considering upcoming elections and Ramadan and Eid festival, when demand increases. Operators also benefit from importing more, so they are cooperating and encouraging government imports as well.

Sir, will the situation be fully resolved before Ramadan?

We hope the import situation will improve soon. For example, one large operator recently informed us that they have already brought 17,800 metric tons, though the report has not yet appeared in official records since shipments have not fully reached port. Once the data is recorded, it will be reflected in supply numbers.
So, we expect gradual improvement has been seen . We should not remain pessimistic; rather, we should look toward to a positive outcome.