Deepening Crisis: Why Bangladesh’s Critical Export Sector Is Running on Fumes
Tue, September 22, 2026 at 8:26 PM GMT+3 8 min read
An explosion of compressed natural gas (CNG) cylinders on Sunday evening in the open parking area of the Pretty Group of factories in Ashulia killed nine people and injured more than 20 others. Workers inside the factory were not hurt.
While Ashulia police have filed a case against those responsible for overseeing the factory and the unsafe use of flammable materials, the four factory units within the compound remain closed as investigations continue.
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Officials from the Fire Service said the factory was using specially installed CNG cylinders inside covered vans to transport gas before taking it into the factory premises for boiler operations, and that "the gas transportation system was completely illegal and unsafe."
The investigation has also raised questions about the condition of the equipment being used. Officials found an expired CNG cylinder among those that exploded, with the instructions, "Don't use after 2021" engraved on it.
The tragedy has focused attention on the increasingly desperate measures factories are taking to keep production running as Bangladesh's energy crisis deepens. Ashulia is a major industrial area on the outskirts of Dhaka where hundreds of factories within the wider Savar industrial belt are located.
"The makeshift mobile fuel supply is an unfortunate reality at this time for many of us," a manufacturer who asked not to be identified told Sourcing Journal.
After Sunday's cylinder explosion, officials from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said a high-level investigation committee would look into the incident, while the organization issued stricter guidelines on safety protocols for unloading, handling and storing chemicals, gas cylinders and other flammable materials.
The incident has reignited urgent discussions over how factories are coping in a sector that accounts for more than 80 percent of Bangladesh's exports, which touched $38.7 billion in fiscal year 2025-26, ending June 30.
Last week, a survey by the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) released survey findings revealing that 55 percent of knitwear factories had faced cancellations or cuts in their global orders as national gas pressure fell 78 percent below normal requirements across major industrial clusters including Narayanganj, Gazipur, Chattogram and Dhaka.
The survey, which covered 134 active member factories representing 20 percent of BKMEA membership, found that 87 percent of exporters had missed shipping deadlines and were compelled to offer discounts to buyers, while 92 percent of factories surveyed had incurred high costs for alternative fuels.
"Almost all respondents are facing a crisis due to shortages of gas and power supply. Production has fallen by one-third to one-half," Fazlee Shamim Ehsan, executive president at BKMEA said, adding that 87 percent of exporters had failed to make shipments on time since the gas crisis began on July 20, followed by an electricity crisis.
"Nearly 60 percent were forced to offer discounts to foreign buyers due to the delays," he said.
For manufacturers, the shortages and efforts to source alternative fuels has come at a steep cost.
Energy expenses at most factories have risen by 30-40 percent in just the last two to three months as pipeline gas pressure has fallen sharply, according to industry analysts. Factories have been forced to substitute pipeline gas with expensive diesel and CNG cylinders to remain operational.
The disruption has come as Bangladesh has been increasingly exposed to shocks in the international energy market. Qatar supplied 95 percent of Bangladesh's imported liquefied natural gas (LNG), and the disruption of supplies from the Middle East has had an immediate impact. More than 40 percent of the country's electricity comes from imported LNG.
The pain is not confined to business. Households across the country are feeling the impact, with power cuts and rising oil and electricity prices.
On Monday, Anindya Islam Amit, state minister for power, energy and mineral resources said that Bangladesh had "no alternative but to raise fuel prices" due to soaring global prices of diesel, petrol, octane and kerosene, which went up by an approximate 15 percent each.
Higher fuel prices are expected to feed through into transport, food and other everyday costs, while businesses face the additional burden of running generators and moving goods.
The industry has been looking for solutions as well.
Last week, leading industry trade organizations including BGMEA, BKMEA and the Bangladesh Textile Mills Association (BTMA) sent a joint crisis letter to the Gas Transmission Company Limited, warning that more than 90 percent of the country's textile and garment manufacturing base was being paralyzed, while sending in suggestions to help the industry.
Among their proposals was a zone-based rationing system that would provide five consecutive days of full-pressure gas followed by two days of predictable shutdowns.
The organizations argued that a predictable system would allow factories to plan around export deadlines while protecting equipment, particularly boilers and other heat-dependent machinery, from damage caused by erratic gas supplies.
The problems with energy supplies had been festering even before prime minister Tarique Rahman's government took office in February 2026, but the new administration was forced to confront an increasingly acute situation following the disruption of supplies from the Middle East in March and surging international oil and gas prices.
Bangladesh had already been facing years of declining domestic gas production, heavy reliance on imported LNG, and underinvestment and structural problems. Prime minister Rahman has described these challenges as "inherited," while promising near-term measures and acknowledging that there are no instant fixes.
An accident at one of Bangladesh's two floating LNG terminals in July further squeezed supplies. A fire at the Excelerate Energy LNG terminal in Maheshkhali damaged critical boiler and control systems, affecting approximately 17 percent of the national gas supply, or 450 million cubic feet a day.
The loss of supply came as electricity and diesel were already expensive and in short supply. Falling gas pressure disrupted boilers and captive power generation at factories, forcing manufacturers to find alternative sources of energy or cut back production.
BTMA president Showkat Aziz Russell said that 50 percent of the BTMA's 1,856 member mills had been severely affected, with factories forced to stop work or scale down significantly. The disruption has also led to a surge in yarn imports to help local production meet demand, he said.
"Things are dire," said Vidiya Amrit Khan, vice president of the BGMEA. But she pointed to an important distinction within the industry: Bangladesh is more heavily concentrated in garment production than textiles, which is far more vulnerable to the current energy situation.
"Our brands are also being very cooperative in understanding," she said, adding that most factories had not let go of their labor. "There may be temporary disruptions, not long-term ones. Business people are under pressure with the shortages, but the factories are functioning."
Speaking about her own factory in Chittagong, she said, "My factory is not sitting idle. That hasn't happened to me yet. We somehow manage to survive and find a way." She emphasized the growing focus on renewable energy.
"The government knows how important the industry is, and in the next two years things will change for sure. We're talking about big policy changes. The recent tax cuts on the import of solar panels to zero percent, for example, down from 66 percent," she added. "The idea is to hit the renewable targets for 2030."
Yet the shift to renewable energy remains slow.
A study cited by the Centre for Policy Dialogue (CPD) in August found that only 31 percent of garment factories had adopted renewable energy technologies, predominantly rooftop solar. The study also found that financing, upfront costs, limited working capital and procedural hurdles were among the barriers to wider adoption. The apparel and textile sector has an estimated potential for up to 2,800 MWp of rooftop solar capacity.
As Dr. Khondaker Golam Moazzem, research director at CPD, said, "There is huge pressure from consumers [and from] electricity cuts; everyone has jumped with short-term solutions."
The Centre for Policy Dialogue set out a list of recommendations to combat the situation in August.
Among the recommendations was a focus on broader renewable electrification, targeted machinery replacement and special financing for smaller factories as they face escalating costs because of limited energy availability. CPD has also highlighted the need for easier green finance, supportive taxation and regulation, and greater coordination between government, industry, financial institutions and global brands.
Moazzem emphasized that Bangladesh needed to move toward a more diversified energy system and to make the process of enforcement easier.
"The cost push is one factor, but there is also the issue of enforcement, and implementation of solar is not so easy. It's not just a tariff and financing issue—certification is an issue, getting permission from authorities, which makes the process slower," he said while summing up the sense of frustration and hope that is creating a sense of helplessness in the industry.
"We have to think longer term, but meanwhile Bangladesh cannot simply wait for the crisis to ease," he said.
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