Directives for Industrial Fuel Reallocation and Synchronized Grid Baseload Management

Situation

Bangladesh faces an acute industrial crisis caused by severe natural gas shortages and an unsynchronized power system. Real economic growth is projected to drop to 3.4% in FY2026-27 [The Daily Star, October 6, 2026], dragged down by a contraction in private investment and an outright quarterly contraction in industrial output during the third quarter of FY2025-26 [The Daily Star, October 6, 2026].

The manufacturing sector cannot absorb these disruptions. Across major industrial corridors, gas distribution pressures have collapsed to levels where heavy industrial machinery cannot function, forcing hundreds of textile and steel plants to halt operations or switch to expensive alternative fuels. Meanwhile, the state has relied on blunt containment measures, such as ordering urban shopping malls to shut early during peak evening hours [The Daily Star, October 6, 2026]. Without immediate, coordinated administrative action to reallocate existing gas supply toward manufacturing hubs, maximize non-gas baseload power generation, and resolve stalled capital connections, industrial insolvencies will continue to drive banking sector non-performing loans upward, permanently eroding the country's export and manufacturing capacity.

Evidence

Macroeconomic and Investment Contraction: Real GDP growth is projected to stagnate at 3.4% in FY2026-27, falling from 5.8% in FY2022-23 and 4.2% in FY2023-24 [The Daily Star, October 6, 2026]. Overall growth dropped to 2.2% in the third quarter of FY2025-26 [The Daily Star, October 6, 2026]. Industrial output grew by just 2.0% in FY2025-26 and contracted outright in Q3, marking the first quarterly industrial contraction since the COVID-19 pandemic [The Daily Star, October 6, 2026]. Annual manufacturing growth slowed to 2.86% in FY2025-26 from 3.71% in the prior fiscal year [The Daily Star, September 14, 2026]. Driven by utility shortages and project reviews, private investment contracted by 0.5% and public investment fell by 0.7% in FY2025-26 [The Daily Star, October 6, 2026].
Structural Gas Deficits and Supply Shocks: Total gas supply is approximately 2,420 million cubic feet per day (mmcfd) against total national demand of 3,800 mmcfd, leaving a deficit of 1,380 mmcfd, or 36% [The Daily Star, September 14, 2026]. Imported LNG constitutes roughly one-third of national gas demand [The Daily Star, October 6, 2026]. Technical failures and weather-induced disruptions at floating storage and regasification units (FSRUs) off Moheshkhali cut gas delivery, forcing industrial facilities to run far below capacity [The Daily Star, October 6, 2026].
Grid Desynchronization and Generation Failures: Total installed generation capacity stands at nearly 32,500 MW, including captive and off-grid facilities, but fuel logistics, generation, and transmission remain poorly synchronized [The Daily Star, October 2, 2026]. Gas-fired power generation fell to roughly 4,000 MW out of 12,154 MW installed gas capacity because power plants received only 744.1 mmcfd against an operational requirement of 2,524.9 mmcfd [The Business Standard, August 10, 2026]. Conversely, the 1,320 MW coal-fired Rampal Power Plant demonstrated baseload viability by supplying 1,234.2 MW directly to the national grid during peak hours to stabilize frequency [The Business Standard, October 5, 2026].
Severe Industrial Output and Pressure Losses: The Dhaka Chamber of Commerce and Industry (DCCI) estimates that energy disruptions cost the industrial sector up to Tk 2,387 crore per day in lost output, and Tk 1,074 crore per day even when factories operate at 55% capacity [The Daily Star, September 14, 2026]. Industrial units engineered for 10 PSI have received as little as 1.5 PSI, while steel plants in Chattogram experienced line pressure dropping to near zero [The Business Standard, July 18, 2026]. Consequently, monthly smelting and re-rolling output at BSRM dropped from 2.25 lakh tonnes to below 1.5 lakh tonnes, while using furnace oil and light diesel oil multiplied fuel expenses almost four times compared to natural gas [The Business Standard, August 24, 2026]. More than 900 out of roughly 1,800 member textile mills under the Bangladesh Textile Mills Association (BTMA) shut down entirely [The Business Standard, August 19, 2026].
Financial Contagion and Stranded Capital: Non-performing loans (NPLs) expanded to 33.2% of total loans by June 2026, up from 20.2% at the end of 2024 [The Daily Star, October 6, 2026]. Tk 35,000 crore across 1,857 project applications remains frozen due to suspended industrial gas connections [The Daily Star, September 14, 2026]. Stranded industrial equipment awaiting fuel connections accounts for between Tk 7,000 crore and Tk 8,000 crore in credit at Trust Bank alone [The Business Standard, July 23, 2026]. Meanwhile, national petroleum import expenditures more than doubled in FY2025-26 [The Daily Star, October 6, 2026].

Prescription

Maximize Non-Gas Baseload Power Generation and Grid Frequency Dispatch Responsible Institution: Bangladesh Power Development Board (BPDB) and Power Grid Bangladesh (PGB) National Load Dispatch Centre. Mechanism: Direct the immediate dispatch of non-gas generation assets to relieve fuel-starved gas turbines, which currently produce only roughly 4,000 MW out of 12,154 MW installed capacity [The Business Standard, August 10, 2026]. BPDB must sustain dispatch from large coal facilities, maintaining the operational benchmark achieved by the 1,320 MW Rampal Power Plant when it supplied 1,234.2 MW during peak load [The Business Standard, October 5, 2026]. Synchronizing base supply across the nearly 32,500 MW system [The Daily Star, October 2, 2026] will allow the grid to maintain stable frequency while releasing scarce natural gas from low-efficiency grid turbines to productive industrial hubs.
Divert Pipeline Gas to Priority Industrial Corridors to Restore Operational Pressure Responsible Institution: Ministry of Power, Energy and Mineral Resources, alongside Petrobangla and gas distribution utilities. Mechanism: Implement a mandatory administrative gas reallocation order that rechannels gas volumes from inefficient urban power plants directly to core manufacturing pipelines in Narayanganj, Gazipur, and Chattogram. Pipeline management must re-establish minimum threshold operating pressures above the catastrophic 1.5 PSI and near-zero levels recorded in heavy production zones [The Business Standard, July 18, 2026]. Restoring viable pipeline pressure will halt the Tk 2,387 crore in daily output losses [The Daily Star, September 14, 2026] and allow more than 900 shuttered textile mills [The Business Standard, August 19, 2026] and throttled steel plants [The Business Standard, August 24, 2026] to resume production without resorting to liquid fuels that cost almost four times more [The Business Standard, August 24, 2026].
Resolve Stalled Industrial Utility Connections to Unlock Stranded Bank Capital Responsible Institution: Ministry of Power, Energy and Mineral Resources, Ministry of Industries, and Bangladesh Bank. Mechanism: Establish a fast-track technical clearance cell to review and prioritize the 1,857 stalled industrial connection applications representing Tk 35,000 crore in locked enterprise investments [The Daily Star, September 14, 2026]. Clearing viable, completed plants will directly de-risk the banking sector, where systemic NPLs have climbed to 33.2% by June 2026 [The Daily Star, October 6, 2026], by bringing idle machinery back into commercial operation, resolving stranded exposures such as the Tk 7,000 crore to Tk 8,000 crore held at Trust Bank [The Business Standard, July 23, 2026].
Institutionalize Peak-Load Urban Shifting and Commercial Demand Management Responsible Institution: Ministry of Power, Energy and Mineral Resources, Ministry of Commerce, and urban distribution utilities. Mechanism: Formalize and extend the policy of early closure for urban shopping malls [The Daily Star, October 6, 2026] into a binding, seasonal peak-hours conservation code. Suppressing non-essential commercial lighting and retail cooling during peak evening hours avoids sudden load-shedding and protects electricity supply to continuous-process industries, preventing further contractions in quarterly industrial output [The Daily Star, October 6, 2026].

Risks and tradeoffs

Offshore Terminal Vulnerabilities:
Balance of Payments Pressure from Liquid Fuels: Diverting natural gas from the grid to factories will require intermediate peaking plants to run on petroleum fuels. With national petroleum import expenditures having already more than doubled in FY2025-26 [The Daily Star, October 6, 2026], higher reliance on liquid fuel imports risks exacerbating foreign exchange deficits.
Urban Commercial Friction: Expanding mandatory early closing rules for shopping malls [The Daily Star, October 6, 2026] imposes revenue losses on retail enterprises, generating political and commercial resistance in major urban centers.

Bottom line

To arrest a severe industrial contraction and prevent stranded enterprise debt from further inflating a 33.2% non-performing loan ratio [The Daily Star, October 6, 2026], the government must immediately prioritize pipeline gas pressure for manufacturing over inefficient gas-fired electricity generation. Grid stability must be preserved by dispatching non-gas baseload capacity like the Rampal coal plant [The Business Standard, October 5, 2026] and codifying urban peak-hour commercial demand restrictions [The Daily Star, October 6, 2026].

Sources

Bangladesh's real GDP growth is projected to stagnate at 3.4% in FY2026–27 (down from 5.8% in FY2022–23 and 4.2% in FY2023–24). [The Daily Star, October 6, 2026]
Industrial sector output grew by just 2.0% in FY2025–26, and the industrial sector contracted outright in the third quarter of that fiscal year—the first quarterly industrial contraction since the COVID-19 pandemic. [The Daily Star, October 6, 2026]
In Q3, overall economic growth dropped to 2.2%. [The Daily Star, October 6, 2026]
Private investment contracted by 0.5% and public investment fell by 0.7% in FY2025–26, driven by chronic utility disruptions and project reviews. [The Daily Star, October 6, 2026]
Imported liquefied natural gas (LNG) now accounts for roughly one-third of total national gas demand. [The Daily Star, October 6, 2026]
Technical failures and weather-induced disruptions at floating storage and regasification units (FSRUs) off Moheshkhali cut gas supply, triggering widespread load-shedding across the grid and forcing industrial units to operate far below capacity. [The Daily Star, October 6, 2026]
To suppress peak urban grid load and prioritize basic distribution, the government ordered urban shopping malls to shut early, attempting to curtail commercial power demand during peak evening hours. [The Daily Star, October 6, 2026]
National petroleum import expenditures more than doubled in FY2025–26. [The Daily Star, October 6, 2026]
Non-performing loans (NPLs) rose to 33.2% of total loans by June 2026, compared to 20.2% at the close of 2024. [The Daily Star, October 6, 2026]
To stabilize grid frequency amid constrained gas-fired power generation, the 1,320 MW coal-fired Rampal Power Plant supplied 1,234.2 MW directly to the national grid during peak load hours, according to the Bangladesh Power Development Board (BPDB) and the Power Grid Bangladesh (PGB) National Load Dispatch Centre. [The Business Standard, October 5, 2026]
Gas-based generation fell to roughly 4,000 MW out of 12,154 MW total installed gas-power capacity because power plants received only 744.1 million cubic feet per day (mmcfd) against a requirement of 2,524.9 mmcfd. [The Business Standard, August 10, 2026]
Industrial units designed for 10 PSI received as little as 1.5 PSI, while in Chattogram, steel plants reported gas line pressure dropping to near zero. [The Business Standard, July 18, 2026]
The Dhaka Chamber of Commerce and Industry (DCCI) estimated that energy disruptions cost the industrial sector up to Tk 2,387 crore per day in lost output (and Tk 1,074 crore per day even when running at 55% factory capacity). [The Daily Star, September 14, 2026]
DCCI reported that manufacturing growth slowed to 2.86% in FY2025–26 from 3.71% in the prior fiscal year. [The Daily Star, September 14, 2026]
Total gas supply stands at approximately 2,420 mmcfd against total national demand of 3,800 mmcfd, representing an unmet deficit of 1,380 mmcfd (36%). [The Daily Star, September 14, 2026]
Tk 35,000 crore across 1,857 project applications remains stalled due to the continued suspension of new industrial gas connections. [The Daily Star, September 14, 2026]
Trust Bank Managing Director Ahsan Zaman Chowdhury noted that between Tk 7,000 crore and Tk 8,000 crore of the bank's industrial credit was stranded in idle machinery awaiting fuel connections. [The Business Standard, July 23, 2026]
More than 900 out of roughly 1,800 member textile mills under the Bangladesh Textile Mills Association (BTMA) were forced to shut down entirely due to fuel and electricity shortages. [The Business Standard, August 19, 2026]
Re-rolling and smelting output at leading producer BSRM dropped from a standard 2.25 lakh tonnes to below 1.5 lakh tonnes per month, with mills using furnace oil and light diesel oil (LDO) reporting fuel expenses almost four times higher than natural gas. [The Business Standard, August 24, 2026]
Total installed generation capacity reached nearly 32,500 MW (inclusive of captive and off-grid), but generation, transmission, and fuel logistics remain insufficiently synchronized, leaving the grid unable to dispatch power reliably during fuel supply bottlenecks. [The Daily Star, October 2, 2026]

Grounded in 12 source documents in the evidence record.

Today's other watched topics

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Topics ranked by gemini-3.8-flash; prescription drafted by gemini-3.8-flash; grounding verified by gemini-3.8-flash. Generated 2026-10-06T11:39:08.111369+00:00.