After Sri Lanka and Pakistan, a fuel crisis is now brewing in Bangladesh as global energy prices continue to remain at elevated levels despite a drop in the WTI crude price to below the psychological $100 a barrel mark for the first time since May. The South Asian country’s import bill has been steadily rising.
Losses for many factories have started to mount as they are being forced to cut down production due to gas shortage. Businesses have urged the Sheikh Hasina government to ensure steady energy supply to factories and increase load shedding to save energy.
“A gas shortage is disrupting power generation and supply to many places,” Bangladesh’s State Minister for Power, Energy and Mineral Resources Nasrul Hamid said on his Facebook page.
“High prices and a supply crunch of fuel in the international market due to the war have put us in trouble like all other countries. In this situation, we apologise sincerely for your temporary inconvenience,” he added.
While Dhaka’s import costs have increased by about 50 per cent, exports have not gone up in comparison to that.
“Owing to the severe gas crisis, the production in the spinning and weaving mills in the industrial zones has halved in the past 11 days. The millers are worried about whether they would be able to keep their production up and running amid the deepening energy shortage,” the Daily Star said in a report.
The ready-made garment (RMG) industry is one of the pillars of the country’s economy. One of the world's largest garment exporters, Bangladesh’s RMG sector accounts for 84 per cent of its total exports.
Amid the fuel crisis, there has been a debate inside Bangladesh on whether it can approach Russia for fuel, without antagonising the anti-Moscow West.
In May, Bangladesh foreign minister AK Abdul Momen was quoted as saying that he had sought advice from his Indian counterpart S. Jaishankar on how New Delhi was purchasing oil from Russia amid the Ukraine crisis as Bangladesh was dependent on energy imports.
‘Russia offered us energy and wheat. It has become a real problem (energy demand). We sought their (India) suggestions on how they are doing it,’ he told reporters while speaking about his meeting with Indian external affairs minister S Jaishankar.
Bangladesh has been caught in a bind as its main RMG exports market comprise the US and European countries, which have thrashed out stringent sanctions against Russia after it invaded Ukraine.
Already pushed to the wall, Sri Lanka, the other South Asian nation, has sought emergency fuel supplies from Moscow.
The Sheikh Hasina government to be on the safe side, has also initiated talks with the International Monetary Fund for a loan of $4-4.5 billion to boost its foreign currency reserves. “There is nothing to panic about — we are just being on the safe side,” the newspaper quoted a finance ministry official as saying.
Global Brent oil price is currently hovering at just over $100 a barrel but indications are that it may also fall in the coming days amid rising fear over slowing economic recovery.
According to a World Bank blog, the Russia-Ukraine war has disrupted global energy markets, generating the biggest surge in crude-oil prices since the 1970s. It further said that the consequences for global growth will be significant: higher energy prices alone could reduce global output by nearly 1 per cent by the end of 2023.
Driven by sharp surge in prices of coal, oil and natural gas, the World Bank’s energy price index increased by 26.3 per cent between January and April, on top of a 50 per cent increase between January 2020 and December 2021.