Bangladesh’s edible oil industry is grappling with severe disruptions, with production slashed to nearly half of its total capacity.
Industry stakeholders attribute this decline to the ongoing gas crisis and complexities surrounding Letters of Credit (LC), which have impeded raw material imports and refinery operations.
The nation’s four largest edible oil producers—City Group, TK Group, Meghna Group, and S Alam Group—command a significant share of the market.
However, due to LC restrictions and gas shortages, these conglomerates are now operating at just 50-60% of their full potential.
According to the National Board of Revenue (NBR), Bangladesh imported 1.2 million tonnes of soybean oil in the first eight months of the 2024-25 fiscal year, with projections indicating that total imports may reach 2.2 million tonnes by year-end.
A further increase to 2.4 million tonnes is anticipated for the 2025-26 fiscal year.
The majority of these imports—nearly 50%—originate from the United States, while Brazil supplies around 34%.
Production constraints and market volatility
City Group, one of the largest soybean oil importers and refiners, has an installed daily production capacity of 3,500 tonnes.
However, current production levels have plummeted to between 1,500 and 2,000 tonnes due to supply constraints.
Other leading refiners, including Meghna Group, TK Group, and KBC Agro Limited, are facing similar setbacks, with operations significantly curtailed.
“LC complexities and the gas supply crisis are the primary obstacles to maximising production capacity,” said Biswajit Saha, director of City Group.
“Despite market demand, our refineries are forced to operate in a rationed manner, switching between different production units. Running edible oil plants means shutting down sugar or flour mills, which is unsustainable.”
The crisis has also affected Meghna Group, which operates three refining plants capable of processing 54,000 tonnes of soybean oil daily.
At present, the company is only able to release 1,000 tonnes of bottled oil per day, with a significant portion allocated to the Trading Corporation of Bangladesh (TCB).
The edible oil sector remains highly dependent on imports, making it vulnerable to fluctuations in global prices and supply chain disruptions.
Experts warn that the current production bottleneck could exacerbate market instability, leading to price hikes and supply shortages if left unaddressed.
With six major refineries currently operating well below their full capacity, the industry’s output remains significantly lower than national demand, raising concerns about future availability.
As economic uncertainties persist, stakeholders continue to urge the government to implement swift and effective measures to stabilise production and ensure market equilibrium.
