For at least two decades, experts inside and outside Bangladesh have been saying the same thing about the country's energy sector: the state cannot keep doing all of it. This month, the government finally began acting on that advice. It instructed the Bangladesh Petroleum Corporation (BPC) to draft a policy allowing private firms to import, store, transport, and market refined petroleum products.
The policy is entirely correct. Yet the clumsy, opaque manner of its introduction seems almost deliberately designed to convince a skeptical public otherwise.
The problem has never been that BPC is inherently incompetent at procuring or distributing energy products, nor that it fails to turn a profit. The primary affliction of Bangladesh’s energy sector is structural…a single set of state institutions controls importing, refining, distribution, and pricing all at once. Some of these entities report tidy profits, but posting surplus balances is hardly an achievement when you are the only player on the pitch.
A state monopoly’s balance sheet reveals nothing about whether a country receives fuel at the right price, at the right time, or in the right quantity.
What it does explain, however, is why capital investment in energy has ground to a halt. Bangladesh requires an immense injection of capital over the coming decade for storage, import terminals, regasification, refining capacity, and distribution networks.
Private foreign capital does not willingly enter a market where the government acts simultaneously as regulator, principal competitor, and price-setter. No sensible investor commits hundreds of millions of dollars to an enterprise whose dominant rival can rewrite market rules at will. This is not ideological dogma; it is the reason energy capital expenditure in Bangladesh has depended so heavily on sovereign guarantees and government-to-government arrangements rather than genuine market capital.
Yet state control is only half the crisis. The deeper distortion lies in blanket subsidies—a problem privatization alone cannot cure. Today, the state buys fuel abroad at 100 taka and sells it domestically at 80, absorbing the difference without the slightest regard for who is buying.
The scion of an industrial tycoon fills his sports car at the exact same subsidized rate as a rickshaw driver earning a precarious living. Both are subsidized identically by a national treasury that can afford neither.
Consider an even starker absurdity. Suppose a tycoon owns both a luxury five-star hotel and a garment factory. In Bangladesh, the gas that heats water for hotel guests and the gas that powers the export-earning factory floor arrive at the same subsidized price, courtesy of the long-suffering taxpayer.
But a luxury hotel is a venue of leisure; there is zero public rationale for subsidizing its utility bills. A garment factory is another matter entirely, earning the foreign exchange that pays for fuel imports in the first place. The current blanket system cannot distinguish between the two because it was never engineered to do so.
The International Monetary Fund has pressed Bangladesh for years to abandon indiscriminate subsidies, noting that wealthier households capture a disproportionate share of benefits meant for the poor. Both the IMF and World Bank recommend multi-year tariff roadmaps paired with scheduled price adjustments and targeted social protection plans.
Targeted rebates on verified fuel consumption, tax credits tied to export performance, or direct cash transfers to irrigation pump owners and public transit operators offer far superior alternatives to blanket hand-outs.
Countries at comparable income levels provide clear roadmaps and cautionary tales. India demonstrated what subsidy targeting requires through its PAHAL scheme, which transfers cash directly into bank accounts while selling gas cylinders at market price, eliminating millions of duplicate and fraudulent accounts. Indonesia abolished blanket subsidies by introducing semi-automatic pricing formulas alongside targeted assistance, though its early attempts faltered precisely because poor government communication left the public bewildered—a mistake Dhaka seems eager to repeat.
Meanwhile, the Philippines successfully dismantled a fuel oligopoly, proving that markets can thrive without state importers, provided a competent regulator prevents private cartels from replacing public ones.
The common thread among successful reformers is simple: build the regulator and targeted support mechanisms before or alongside market deregulation, not afterwards.
This brings us to the ruinous execution currently on display in Dhaka. The government’s substantive judgment is sound, but its communication and procedural handling are disastrous. BPC was given a ludicrous four working days to draft a policy reshaping the entire downstream fuel sector—after its own review committee’s objections were brushed aside and its chairman abruptly reassigned.
The initiative followed a proposal from Bashundhara Oil and Gas Company to import and market over three million tonnes of refined fuel annually, roughly half of total national demand. The same conglomerate received bespoke crude import permissions in June 2024 under a policy no other firm had utilized.
Whatever the ministry’s internal motives, this sequence appears to the public as a policy tailored for a single, politically connected conglomerate. A reform backed by two decades of expert consensus is being received as an insider favor—a self-inflicted catastrophe of public relations and policy execution.
The remedy is not to abandon deregulation, but to make it transparently fair. The government must publish the draft policy, invite public consultation, and open licensing to any firm meeting objective financial and technical criteria without pre-allocating volume to anyone.
It must empower an independent regulator with real authority over market conduct before the first private tanker docks, publish an automatic pricing formula to render price changes purely mathematical, and announce targeted subsidy mechanisms in the same breath.
Handled correctly, importing and selling fuel will become an ordinary private enterprise, much as telecom became after decades of endless queues at state counters. Handled the current way, a necessary structural reform will be remembered as a heist, leaving the government buried under political fallout and well-deserved public fury.
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Shafquat Rabbee is a Geopolitical Commentator who writes from the United States