Sep 26, 2026
| Harunur Rashid
The International Finance Corporation (IFC), the World Bank Group's international financing arm, had identified management capacity as a major environmental, social, health, and safety risk even before financing Excelerate Energy's floating LNG terminal in Maheshkhali, Bangladesh. In the IFC's Environmental and Social Review Summary (ESRS) published in 2017, it was stated that the company's management capacity was a significant risk in the development and operation of a floating LNG regasification terminal; simultaneously, how environmental and social risks would be considered in planning, design, construction, and operation was also part of the risk assessment.
However, the IFC's published assessment document does not explicitly discuss system-level redundancy or backup risks, such as the consequences of a terminal shutdown or the extent of alternative supply arrangements if Bangladesh's national gas supply system becomes dependent on only a few floating terminals. According to information found in the investigation, the gas crisis that emerged in July after the shutdown of a terminal's operations brought this broader question, which was outside project-specific risk assessment, to the forefront.
According to the 2017 ESRS, the IFC initiated up to $136.3 million in debt and equity financing for Excelerate Energy Bangladesh Limited's Maheshkhali floating LNG project. The project was established approximately 2.4 kilometers offshore of Maheshkhali Island. IFC's financing covered permanent infrastructure such as a submersible turret mooring system, a 7.5-kilometer subsea pipeline, and an onshore gas delivery point.
The document also stipulated the creation of a separate Emergency Response Plan (ERP) to handle emergency situations, in addition to management capacity. It called for the establishment of a framework for rapid, safe, and effective responses to fires, explosions, vessel-related accidents, and various other emergencies. Communication arrangements with local and national authorities were also part of the ERP.
However, nearly a decade later, on July 21, 2026, a fire incident at the terminal brought the project's security and its impact on the national energy system back into discussion. According to Petrobangla officials, the fire, which lasted for more than 15 minutes, damaged critical power, control, and instrumentation cables connected to the two boilers of the floating LNG storage and regasification unit (FSRU). Although the boilers themselves were not directly damaged, a large portion of the necessary replacement cables had to be sourced from abroad. The damaged cables included those supplying power to boiler motors, fuel-oil burners, transformers, and pre-heaters.
Following the fire, its impact was directly felt in the national gas supply. According to estimates by Petrobangla and energy division officials, the shutdown of Excelerate's operations led to a reduction of approximately 450 to 500 million cubic feet of gas daily in the national gas system. This created a crisis across all sectors, including households, industry, transportation, and power generation.
State Minister for Power, Energy and Mineral Resources, Anindo Islam Amit, told journalists at the Secretariat on July 27 that it was initially believed to be a boiler explosion, and some other components might have also been damaged. At the time of the incident, an LNG cargo was near the terminal; it was quickly moved to a safe distance, preventing a major disaster. Neither Excelerate, Summit, nor the Government of Bangladesh had prior experience dealing with such accidents.
After being shut down for nearly two weeks, Excelerate's terminal partially resumed operations on August 6. According to Petrobangla, initially about 115 million cubic feet of gas began to be sent to the national grid using one boiler. Later, the supply increased to approximately 230 million cubic feet. Before the accident, the terminal was supplying about 450 million cubic feet of gas, although its regasification capacity is 600 million cubic feet.
However, the IFC states that its assessment was project-specific. In a written statement responding to questions about the national economy, the IFC said that the primary objective of its investment was to diversify Bangladesh's energy supply through LNG imports and to address the existing gas deficit. The organization stated that its due diligence process considered technical, financial, operational, environmental, and social aspects, and risks were identified with the company, and necessary measures were determined. The IFC also noted that Excelerate has an environmental and occupational health and safety management system, which is independently certified under the International Safety Management (ISM) Code. The organization also stated that the company's emergency response system was activated during the July fire.
Regarding the issues of national energy system problems and infrastructural redundancy, the IFC's statement is that these are the responsibilities of the Bangladesh government and relevant sector-specific authorities; such national-level issues do not fall under project-specific IFC due diligence. Regarding the July incident, the IFC stated that they received an initial incident report from the company, which their technical team reviewed. Reports on root cause investigation and corrective and preventive measures have also been requested.
However, the risks of the LNG terminal at the local level are not limited to national gas supply. There are also allegations of livelihood loss in the fishing villages of Kutubjom, Maheshkhali, after the terminal's establishment. Fishermen Abdul Malek, Mohammad Shukur, and Shahjahan of Ghotivanga, along with others, share the same complaint. They claim that over the past seven years, more than two hundred small engine-powered fishing trawlers have deteriorated while left on the shore. Many boat owners are now working as laborers on larger trawlers, they stated. Some fishermen have also alleged that when they try to fish in that area for their livelihood, hot water is discharged from the terminal, and attempts are made to sink their boats. Independent verification of these allegations has not been possible.
Maheshkhali Upazila Fisheries Officer, Shahedul Islam, stated that although the terminal authorities prevent fishermen from fishing in certain areas, no 'no-fishing zone' has been officially designated there by the government. Therefore, legally, there is no opportunity to prevent fishermen from fishing. He added that local fishermen are directly affected by the terminal authorities preventing them from fishing in a large area, citing security reasons.
Of course, the potential impact on fishing had been part of the project's environmental and social assessment even before the terminal was established. Citing a 2015 survey, the project's ESIA stated that in Maheshkhali Upazila, 168 fishermen owned 222 engine-powered or mechanized fishing boats. Interference with fishing opportunities for the fishing community due to project activities and alternative livelihoods were also discussed at that time.
The project document stated that a 500-meter safety zone should be maintained around the FSRU for small boats. The same document mentioned that this safety zone could affect fishing and local vessel movement, and local fishermen had expressed concerns about this during project consultation. Measures for stakeholder engagement and grievance redressal were supposed to be established to address these concerns.
According to a study by the Coastal Livelihood and Environment Action Network (CLEAN), Petrobangla has had to pay $1.14 billion in capacity charges over the past eight years for Excelerate Energy and Summit's floating terminals (FSRU) for LNG imports. While this cost was $85 million in the 2018-19 fiscal year, it has risen to $164 million in the 2025-26 fiscal year. This means an average annual increase of 13.5 percent in capacity charges over eight years.
Energy expert and Chief Executive of Coastal Livelihood and Environment Action Network (CLEAN), Hasan Mehedi, said that Bangladesh is paying a heavy price for its growing reliance on imported LNG. The country has to pay two private Floating Storage and Regasification Units (FSRUs) a daily terminal fee of $454,000, even if not a single unit of LNG is regasified. Since 2018, the government has spent $25.65 billion on LNG imports.
He stated that risk assessment of energy infrastructure should not be limited to evaluating internal security systems, equipment, or management capacity within a project. The impact on the country's gas supply, power generation, industry, and other sectors if an LNG terminal shuts down should also have been part of the assessment from the beginning. This increasing expenditure is in no way the path to energy security. In the interest of national energy security, it is imperative to immediately break free from the fossil gas trap and accelerate the transition to affordable and decentralized renewable energy.
Following the fire incident at the Maheshkhali LNG terminal in July this year, the government has initiated plans to establish a third floating LNG terminal (FSRU) in Kutubjom. However, the new terminal may take at least two to three years to implement. Consequently, the opportunities to immediately overcome the clear risk of reliance in the national gas supply system, which became apparent after the accident, are limited.
On September 14, Prime Minister's Office spokesperson Mahdi Amin stated at the Secretariat that due to the current two FSRUs, a reliance on LNG supply has developed. One of them had been out of order for a long time. Alongside its repair, plans have been made to increase the number of FSRUs. Mahdi Amin said the goal is to have three FSRUs initially and then five. Efforts are underway to add the third FSRU before the start of 2028.
S.M. Rubel, Cox's Bazar correspondent of Jatiya Arthaniti, assisted in preparing this report.