A Freight Bill Exposing Growing vulnerability of Our Energy Supply

A report published in this newspaper today revealed that Bangladesh Petroleum Corporation (BPC) may have to pay an additional $5.4 million (around Tk 66.63 crore) in freight charges for importing a 100,000-tonne cargo of crude oil from Saudi Arabia and the United Arab Emirates under G2G agreements. The extra cost stems from a route diversion after security threats in the Red Sea forced the tanker to avoid the Bab-el-Mandeb Strait and sail around the Cape of Good Hope. As a result, the voyage expanded from about 4,200 nautical miles to nearly 9,000 nautical miles, delaying the shipment by more than a month. While the diversion was unavoidable to ensure the safety of the vessel and its crew, it is also a stark reminder of how vulnerable our energy supply chain has become in this increasingly uncertain world.

However, we depend heavily on imported petroleum to power our economy. Eastern Refinery alone imports around 1.5 million tonnes of crude oil annually, while the country’s total petroleum demand is about 7.2 million tonnes. Such dependence leaves us exposed not only to fluctuations in global oil prices but also to disruptions in international shipping. The continuing instability in the Red Sea has shown how conflicts far from our shores can suddenly increase freight costs, delay fuel supplies and place additional pressure on public finances. There is absolutely no way to dismiss this as a one-off incident. Similar disruptions are likely to become more frequent in the world.

Against this backdrop, the government should treat this episode as a timely wake-up call. Expanding strategic petroleum reserves should become a priority to cushion the country against temporary supply disruptions. Concurrently, Bangladesh should diversify its sources of crude oil imports and regularly review procurement, shipping and risk-sharing arrangements to minimise the financial impact of geopolitical crises. However, our long-term objective must be to reduce excessive dependence on imported fossil fuels by accelerating domestic gas exploration, improving refinery capacity and investing more seriously in renewable energy.

Also, every additional freight claim involving public money must be carefully examined and negotiated transparently. It is encouraging that Bangladesh Shipping Corporation is trying to reduce the claimed additional freight cost to around $3.5-4 million. Even so, this incident highlights the need for stronger risk assessment, better contingency planning and closer coordination among the agencies responsible for fuel imports.

In conclusion, we cannot control conflicts in distant regions, but we can prepare for their consequences through better planning and stronger institutions. Energy security today is about more than ensuring enough fuel reaches our shores; it is about building a resilient supply system that can withstand global shocks. Our policymakers therefore should treat this episode as a warning, for the cost of preparedness will always be far less than the cost of complacency.