Centre for Policy Dialogue (CPD) has called for the immediate re-tendering of 37 renewable energy-based power projects that were cancelled by the interim government.
These projects had previously been awarded without competitive bidding by the former Awami League government under the controversial "Speedy Enhancement of Power and Energy Supply (Special Provision) Act, 2010."
During a dialogue held in Dhaka on Thursday (18 October), CPD representatives proposed that the tenders be issued using the "reverse auction" method, allowing multiple suppliers to bid, with the lowest price quote winning the contract.
The event was moderated by Fahmida Khatun, executive director of the CPD.
Following the political transition in August, the interim government annulled a total of 42 power plant projects on 27 August, which included the 37 renewable projects with a combined capacity of approximately 3,102 megawatts (MW).
According to CPD analysis, 30 of these plants were intended to be established through joint ventures or build-own-operate (BOO) initiatives involving investors from 15 different countries.
Khondaker Golam Moazzem, research director of the CPD, highlighted that the decision to cancel these projects has sent mixed signals to investors regarding the interim government's long-term objectives for clean energy. He made these remarks while presenting the keynote paper at a dialogue titled "Overseas Investment in the Renewable Energy Sector: How to Attract Chinese Investment in Bangladesh?" at the Lakeshore Hotel Gulshan in Dhaka.
He noted that the Speedy Supply Act enabled the previous regime to enter into unsolicited contractual agreements that were criticized for higher contracted prices and capacity payment provisions. He justified the interim government's repeal of the Speedy Supply Act for future public procurement under the Ministry of Power, Energy, and Mineral Resources, as well as for contracts not yet in the construction phase.
This move aims to foster open, transparent, and competitive purchasing in the power and energy sector.
CPD also emphasised the importance of attracting Chinese investment in renewable energy projects.
Dr Moazzem stated that the interim government's decision to adopt an open and competitive tendering process for new power plants would provide numerous opportunities for Chinese investors and financiers, who are expected to secure better deals compared to the cancelled projects.
The Power Development Board (PDB) is reportedly preparing to issue tenders for the development of 10 grid-connected solar power plants in the private sector, each with a capacity of 50 MW, amounting to a total of 500 MW.
Dr Moazzem indicated that Chinese investors are particularly well-positioned to invest, given their reputation for offering competitive prices compared to other foreign or local investors.
According to Dr Moazzem, nearly $39.74 billion in global funds is available for renewable energy investments in Bangladesh, accessible through loans, equity, technical assistance, and financial aid.
He noted that Chinese investors typically prefer to use funds from Chinese financial institutions, such as the China Development Bank (CDB), Asian Infrastructure Investment Bank (AIIB), Exim Bank of China, and Silk Road Fund.
He explained that Chinese investors usually refrain from engaging in the planning phase of renewable energy projects, opting instead for local private firms or the government to handle project planning before bidding for investment and equipment supply.
Dr Moazzem believes that if Chinese companies become involved, local investors could secure financing from Chinese institutions.
However, he highlighted some risks and challenges that foreign investors face, including currency volatility, bureaucratic permit risks, and financing challenges related to securing affordable funding.
Additional concerns encompass land acquisition issues, social acceptance, grid limitations, and off-taker credit risks, all of which can impact project feasibility.
A major concern for Chinese investors is the Bangladesh government's preference for resolving disputes domestically, which contrasts with international norms favouring neutral, third-party arbitration.
Dr Moazzem also praised the government's decision to publish data and documents related to power plants, emphasising its importance for transparency, especially given the previous regime's non-transparent culture that hindered access to contract documents.
Gan Peng, chairman of Chint Solar (Bangladesh) Co Ltd, expressed concerns about the higher tariffs compared to neighbouring countries and the political climate in Bangladesh.
"As a foreign investor, how can we feel secure after hearing of the political instability?" he questioned.
Shafiqul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis, echoed similar sentiments, urging the interim government to reduce import duties to encourage foreign investment.
Md Ariful Hoque, director general of the Bangladesh Investment Development Authority, mentioned the establishment of a 24/7 virtual service portal for investors, including a dedicated desk for Chinese investors.
He voiced concerns over land availability for renewable energy projects, stating that nearly three acres of land is required to generate one megawatt of power. Given Bangladesh's land scarcity, he suggested utilising unused land in economic zones and gardens.
Md Abdur Rahman Khan, chairman of the National Board of Revenue (NBR), assured attendees that the government would not alter its policies unless deemed "very necessary."
He committed to maintaining policy consistency and encouraged businesses to report any harassment or obstacles via the online Grievance Redressal System (GRS).
Regarding tax exemptions, Khan stated that the revenue board must reduce tax expenditure to balance the tax-GDP ratio, a recommendation made by think tanks, economists, and civil society for several years.
"This does not mean that we will eliminate all existing tax benefits. Definitely not. We have to set our priorities," he asserted.
