Bangladesh Garment Industry Faces Severe Energy Crisis and Economic Strain
Rising fuel costs and power shortages threaten the nation's vital apparel export sector.
1Energy Crisis Impacts Production
Bangladesh's garment industry, a $38.7 billion sector, faces severe operational disruptions due to frequent grid failures. Factories like Ha-Meem Group rely heavily on expensive diesel generators to maintain production for major global brands. This reliance on fossil fuels has become a critical vulnerability as energy costs continue to climb rapidly.
2Global Fuel Price Volatility
Geopolitical conflicts in Ukraine and Iran have caused industrial gas prices to surge by 150% and diesel by 70%. The cost of spot liquefied natural gas has nearly tripled, placing immense pressure on the nation's economy. These external shocks disproportionately affect developing nations that depend heavily on imported energy resources.
3Infrastructure and Import Shortfalls
Bangladesh suffers from chronic underinvestment in domestic gas fields and transmission infrastructure. Imports of LNG plummeted 83% between July and August due to blockades at the Strait of Hormuz and terminal fires. Consequently, the national power shortfall now exceeds 3,000 megawatts, forcing the government to implement widespread energy rationing.
4Political Challenges for Leadership
Prime Minister Tarique Rahman faces significant pressure as energy shortages become a central opposition rallying point. The government must navigate complex diplomatic relations while managing a power grid that relies on electricity imports from India. These strategic vulnerabilities are complicated by the ongoing fallout from the ouster of the previous administration.
5Nuclear Energy Project Delays
The Rooppur nuclear power station, built by Russia’s Rosatom, has faced repeated delays due to the Ukraine war. While a controlled reaction was achieved in October 2026, the plant requires months of testing before reaching its 1,200 MW capacity. Future operations may also face complications from upcoming U.S. sanctions on Russian sectors.
6Strategic International Energy Ties
Dhaka is balancing competing interests by signing nuclear cooperation agreements with the U.S. while simultaneously deepening ties with Beijing. Bangladesh recently secured 17 agreements with China, including renewable energy projects. However, these partnerships risk friction with Washington, especially as some involved corporate groups remain subject to existing U.S. trade sanctions.
7Solar Energy Adoption Hurdles
The government has incentivized rooftop solar by reducing import duties from 17% to 1% to boost capacity. Despite adding 200 MW in early 2026, current installation rates must increase sixfold to meet targets. For energy-intensive factories, solar remains insufficient as it only provides power during peak daylight hours for 24/7 operations.
8Efficiency Drives in Manufacturing
Manufacturers are implementing aggressive efficiency measures to offset rising energy costs, which have reached $300,000 daily for some large firms. Management uses detailed spreadsheets to monitor employee output against hourly targets to minimize waste. This relentless focus on productivity is essential to prevent orders from shifting to regional competitors like Vietnam.
9Broader Economic and Social Risks
The energy crisis extends beyond factories, with 18.1 million citizens facing potential food insecurity. Rural areas endure blackouts lasting up to 16 hours, disrupting daily life and basic services. As businesses struggle, the government faces the difficult task of stabilizing the economy while protecting the most vulnerable segments of the population.
10Future Roadmap for Stability
The government's new energy roadmap aims to add 12,940 MW of capacity through solar, coal, and 300 new exploration wells. Industry leaders hope these measures will resolve the power crisis within three to four years. Success remains contingent on regional stability and the ability to secure consistent fuel supplies amidst ongoing geopolitical tensions.
Original article: TIME — Bangladesh Garment Industry Faces Severe Energy Crisis and Economic Strain