Prime Minister Sheikh Hasina – during her ongoing visit to Italy for participating in the United Nations Food and Agriculture Organisation (FAO) summit – will sign a memorandum of understanding (MoU) on energy cooperation with the country.
According to the Ministry of Foreign Affairs, as part of the upcoming agreement, Bangladesh will prioritise liquefied natural gas (LNG) imports from Italy, along with cooperation in the fields of renewable energy, energy refining technology, and other key bilateral issues.
Prime Minister Sheikh Hasina is visiting Italy from July 24 to 26. She is scheduled to address the food summit in Rome. She will leave Rome for Dhaka on July 26.
Addressing a press conference on Thursday, Foreign Minister AK Abdul Momen said, “During her visit to Rome, Prime Minister Sheikh Hasina will meet Italian Prime Minister Georgina Meloni on the sidelines of the FAO summit.
“Bangladesh will sign two MoUs on energy cooperation and cultural exchange with Italy.”
He added, “As an alternative source, Bangladesh wants to import fuel from Europe. We are dependent on the Middle East in terms of fuel. We seek to increase ties with Europe as part of our plan to achieve energy diversification.”
The same day, Foreign Secretary Masud Bin Momen told the media, “There is a possibility of signing a memorandum of understanding with ENI, one of the largest gas and oil producers in Europe, in order to reduce our dependence on energy from the Middle East.
“We want to make energy deals with Southeast Asian countries as well.”
The government has taken up a multilateral strategy in a bid to address recent power disruptions triggered by severe fuel shortages. Under this initiative, the government plans to move away from Middle East-based energy import policy.
Bangladesh has already signed MoUs with neighboring India, and other South East Asian countries such as Malaysia, Brunei and Indonesia. The initiative to import energy from Europe is now underway.
Fuel has become a much-discussed issue, as many of Bangladesh’s power plants had been facing difficulties staying in production. The country’s power sector is heavily dependent on imported natural gas, coal and fuel oil.
This dependency makes Bangladesh vulnerable whenever the global politics heats up, especially when wars and conflicts break out in another corner of the world.
The largest sources of primary energy in Bangladesh are the Middle Eastern countries of Saudi Arabia, United Arab Emirates, Qatar, Oman and Kuwait. Bangladesh imports crude oil, LNG, bitumen, jet fuel and other petroleum products from this region.
Moreover, Bangladesh’s coal-based power plants are supplied by Indonesia.
Foreign ministry officials said Bangladesh’s ongoing shortage of USD is hampering the country’s energy imports. After the Ukraine war began, Middle Eastern countries began focusing more on Europe.
This chain of events has put Bangladesh into a difficult situation regarding fuel supply. So, the country is working towards reducing dependency on the Middle East.
Prime Minister Sheikh Hasina plans to sign a deal with energy conglomerate ENI during her ongoing visit to Italy as part of the ongoing energy diversification efforts, foreign ministry sources say.
Experts have always criticised strongly about Bangladesh’s heavy dependence on energy imports, a dependency that continued amid the USD crisis.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid had recently said by 2030, Bangladesh will need to spend $20 billion annually for energy imports.
Italy a $2b market
Italy is one of the markets that provide Bangladesh with more than $2 billion in export earnings annually. Bangladesh earned $2.39 billion from exports to Italy in FY23, with a 40.48 per cent export growth during the period.
Most of Bangladesh’s earnings from Italy are from readymade garment exports. In FY23, Bangladesh earned $2.27 billion from this sector, and the growth was 48 per cent.
Bangladesh's exports to Italy are high but imports are low, indicating that bilateral trade between the two nations is not that significant. EPB data show that bilateral trade between Bangladesh and Italy decreased in two consecutive fiscal years, and then revived again in FY22.
According to Bangladesh Bank and Export Promotion Bureau (EPB) data, the trade volume of the two countries in FY22 was $2.25 billion, while the export volume of Bangladesh was $1.7 billion and import volume was $554 million.
The main export items of Bangladesh to Italy are RMG, frozen fish, tea, rice and tobacco. Meanwhile, the main import products are electrical equipment, chemicals, rubber, textile and aircraft.
Italy's investment in Bangladesh is not much compared to other European countries. According to central bank data, the country's net investment in Bangladesh was only $3.3 million in 2022.
On the other hand, in December last year, Italy's total investment stock stood at $27.88 billion. Bangladesh's long-term debt in the country was 12.33 million last year.
