Bangladesh Scraps a Costly LNG Terminal Plan, Leans on China and Spot Cargoes to Keep the Gas Flowing

Bangladesh's energy planners made two very different bets in the same week. First, they walked away from a long planned LNG import terminal that would have locked the country into a 15 to 20 year contract. Then, in Bangkok, they asked China's Export Import Bank to move faster on financing the power plants and grid upgrades the country already has under construction.

• The Cabinet Committee on Government Purchase declined to approve a floating LNG terminal at Kutubjom in Maheshkhali, which would have added 600 million cubic feet a day of regasified gas at a cost of Tk12,324 crore over 15 years, or Tk13,161 crore over 20.
• Instead, the government approved buying nine LNG cargoes from five suppliers, split between direct purchases and government to government deals, for delivery between December 2026 and December 2027.
• Days later in Bangkok, China Exim Bank told Power Minister Iqbal Hassan Mahmood it wants to speed up financing for the Payra Thermal Power Plant's expansion and for grid and distribution upgrades around Dhaka.
• A separate meeting with the US Treasury focused on debt management support, with Finance Minister Khosru saying Bangladesh has received less American backing than it expected and is pushing for more.

Why the Kutubjom Terminal Got Shelved

The Kutubjom floating storage and regasification unit had looked, as recently as July, like a done deal. The Cabinet Committee on Government Purchase gave it in principle approval on July 28, with China National Energy Engineering and Construction Company lined up for a government to government arrangement. The pitch was straightforward: domestic gas production keeps declining and existing terminals keep running into technical problems, so a new terminal would add badly needed import capacity.

That approval did not survive contact with the numbers. Over a 15 year contract, Kutubjom would have cost Tk12,324 crore; stretched to 20 years, it would have cost Tk13,161 crore. The committee ultimately declined to approve it, and the Energy and Mineral Resources Division has since withdrawn the proposal altogether. No public explanation has been given for the reversal, but the timing, right as the government also signed off on buying LNG from the spot market instead, suggests officials decided a long term, high cost commitment was the wrong tool for a short term supply problem.

Buying Gas Cargo by Cargo Instead

In place of the terminal, the Cabinet Committee on Economic Affairs recommended in principle approval for LNG from five suppliers. Direct purchases will come from BP Singapore, Sahara Energy Resource, and Shell International Trading Middle East, while government to government procurement will run through Cheniere Marketing International and Trafigura. Nine cargoes from Trafigura alone are set for delivery between December 2026 and December 2027, subject to adjustments in either direction. The proposals as submitted did not specify volumes, contract values, or firm delivery schedules, underlining that this is a flexible, deal by deal approach rather than the fixed long term capacity a terminal would have locked in.

The same batch of cabinet decisions approved smaller but telling purchases elsewhere: roughly Tk1,466 crore for fertiliser imports, including urea from Saudi Arabia and the UAE, muriate of potash from Russia and Canada, and diammonium phosphate from Saudi Arabia, plus a Tk103.45 crore sugar tender. Energy, farm inputs, and food staples are all being bought the same way right now: cargo by cargo, rather than locked into decade long contracts.

China Steps Up Where Spot Buying Can't Reach

Spot cargoes solve a supply problem, not a financing one. That is where China Exim Bank comes in. A delegation led by bank president Wang Chunying met Power Minister Iqbal Hassan Mahmood at the Bangladesh Secretariat on October 15, with Invest Bangladesh chairman Ashik Chowdhury and senior Power Division officials also present. The minister pressed for faster financing on two fronts that are already under way: expanding the Payra Thermal Power Plant, and strengthening the power grid network and DPDC's distribution system around Dhaka under an existing government to government arrangement.

The two sides agreed, in the meeting's own words, "to expedite institutional responses to speed up financing clearances," while China Exim Bank also flagged interest in financing ground mounted and floating solar, wind, and waste to energy projects.

That meeting did not happen in isolation. On the sidelines of the same IMF and World Bank annual meetings in Bangkok, a separate Bangladeshi delegation met US Treasury officials, who assured cooperation on debt management and bilateral relations, support that matters in part because of Washington's influence over IMF decisions. Khosru used the moment to press for more American support, citing Bangladesh's aircraft and soybean purchases from US suppliers as reasons it deserves more in return. China's Exim Bank chairman is expected in Dhaka the following week to continue the conversation in person.

What It Means for You

For households and businesses, LNG bought cargo by cargo at prevailing spot prices, rather than through a dedicated terminal with fixed long term pricing, tends to track global gas markets more closely. That means energy bills stay more exposed to swings tied to events like the Middle East conflict, which has already pushed up fuel import costs this year. If your household budget or business plan assumes stable utility costs, it is worth building in a buffer for gas and electricity price volatility over the next year or two rather than assuming today's rates hold steady.

For the broader economy, faster Chinese financing for power generation and grid upgrades, if it actually materialises on the timeline officials are asking for, should help with one of the chronic complaints from manufacturers and exporters: unreliable power supply. That matters most for garment factories and other export oriented businesses that have cited energy shortages as a drag on output in recent months. Whether that translates into fewer load shedding days anytime soon depends on how quickly financing clearances move from "expedited" in a meeting readout to actual disbursed money.