Bangladesh among four countries falling behind on LNG power: more than half of 136 projects stalled, IEEFA says

Abnormal price rises for liquefied natural gas on international markets, sharp currency depreciation and long delays in equipment supply have left more than half of the proposed LNG-based power plants and terminals in four Asian countries, including Bangladesh, stalled. The picture emerges from a recent analysis by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report, titled 'LNG-to-Power in Emerging Asia: A Five-Year Review of Project Outcomes', says that since 2021 high operating costs and uncertainty over financing have severely stalled expansion of the LNG-based power sector in Bangladesh, Vietnam, the Philippines and Thailand.

The report tracked 136 LNG-based power plants and import terminals in the four countries worth about $132 billion. It found that between 2021 and 2026, 49 power projects and 22 import terminals were either cancelled outright or made no meaningful progress.

The combined financial value of the projects stuck in uncertainty is about $67.8 billion, roughly four and a half times the total financial value of the projects successfully commissioned in the past five years, the report says.

Only 11 percent of the total proposed generation capacity and only 15 percent of terminal capacity analysed actually materialised. Plants that did start up took on average more than seven years to generate power commercially, although such plants would normally be expected to come online in three to four years.

According to IEEFA, a supply crisis for gas turbines on world markets has multiplied the capital cost of building new power plants. Procuring specialised turbines for heavy industry now requires a wait of more than six years.

The report says the Ukraine war in 2022 and the Middle East conflict in 2026 pushed energy markets into instability; as a result, in September 2026 the price of LNG on Asia's spot market reached $27.5 per MMBtu.

Because of these headwinds, the lifetime unit cost of generation at the plants could rise by as much as 130 percent compared with initial estimates in 2021, energy specialist Christopher Dolman has warned. In his view, the assumption of cheap fuel and low costs on which the countries based their plans has proved unworkable in the current global reality.

On Bangladesh, the institute's lead energy analyst for the country, Shafiqul Alam, said that whenever the world price of LNG touches $20 per MMBtu, the government has to pay a subsidy of more than 60 taka per cubic metre of gas. This year, disruptions to international supply forced the government at times to buy LNG at even higher prices, putting extra pressure on the national budget.

The report says that although three LNG power plants have started up in Bangladesh since 2021, the gas shortage has not eased for lack of sustainable supply, and fuel costs have increased reliance on foreign loans to protect reserves. To overcome the crisis, it advises strengthening domestic gas exploration rather than chasing imports, increasing efficiency in fuel use, and expanding renewable technologies such as solar and wind power on a large scale.

The report also details the other three countries. In the Philippines, the absence of bankable long-term power purchase agreements and the growth of renewable energy have destroyed the commercial viability of new import terminals. In Vietnam, only one LNG-based plant has come into production in five years. Thailand has made some progress in building infrastructure, but a large part of its existing plants and terminals sits idle for lack of demand.

Research head Sam Reynolds says uncertainty in energy and foreign-exchange markets has shrunk the scope for assured project revenue in the region's countries; as a result, LNG expansion in emerging Asia has become extremely slow compared with expectations for international gas trade.