- The Centre for Policy Dialogue (CPD) has called for the immediate float of tenders for 37 renewable energy-based power projects that the interim government cancelled.
- Moazzem added that the Speedy Supply Act allowed the previous regime to enter unsolicited contractual arrangements that were criticised for higher contracted prices and the provision of capacity payments.
The Centre for Policy Dialogue (CPD) has called for the immediate float of tenders for 37 renewable energy-based power projects that the interim government of Bangladesh cancelled.
The previous Awami League government awarded these projects without bidding under the controversial “Speedy Enhancement of Power and Energy Supply (Special Provision) Act, 2010.”
At a dialogue in Dhaka, Bangladesh, on October 17, local think tank CPD proposed that the tenders be floated using the “reverse auction” method. Multiple suppliers will bid, and the lowest price quote will win the contract.
After the political changeover in August, the interim government scrapped 42 power plant projects on August 27, including the 37 renewables plants with a combined capacity of around 3,102 megawatts (MW).
Of them, 30 plants were to be set up under joint ventures or build-own-operate (BOO) initiatives by investors from 15 different countries, according to the CPD analysis.
“The decision to cancel these projects sent a mixed signal to investors about the interim government’s long-term goal on clean energy,” said Khondaker Golam Moazzem, research director of the CPD, while presenting the keynote paper.
He spoke at the Lakeshore Hotel Gulshan in Dhaka in a dialogue titled “Overseas Investment in the Renewable Energy Sector: How to Attract Chinese Investment in Bangladesh?”.
Moazzem added that the Speedy Supply Act allowed the previous regime to enter unsolicited contractual arrangements that were criticised for higher contracted prices and the provision of capacity payments.
He added that to reduce the prevailing fiscal and financial burden, the interim government has justifiably repealed the Speedy Supply Act for future public procurement under the Ministry of Power, Energy, and Mineral Resources and for contracts that have not yet entered the construction phase.
Moazzem said maintaining public procurement rules will allow for open, transparent, and competitive purchasing in the power and energy sector.
Moazzem said that the interim government’s decision to adopt an open and competitive tendering process for new power plants would present several opportunities for Chinese investors and financiers. At the same time, the ministry is expected to secure better deals than the cancelled ones.
“The Power Development Board (PDB) is now preparing to issue tenders for developing ten grid-connected solar power plants in the private sector, each with a capacity of 50 MW, totalling 500 MW. Chinese investors now have a particularly good opportunity to invest as they are known to offer more competitive prices than other foreign or local investors.”
The CPD research director said nearly $39.74 billion in global funds is available for renewable energy investments in Bangladesh, which can be accessed through loans, equity, technical assistance, and financial aid.
Moazzem also highlighted some risks and challenges for foreign investors. “Some key risks persist, including currency risks due to local currency volatility, permit risks from bureaucratic hurdles, and financing risks related to securing affordable funding,” he said.
“Additional challenges include land acquisition issues, social acceptance, grid limitations and off-taker credit risks, all of which impact project feasibility.”
He said the major concern for Chinese investors is the Bangladesh government’s insistence on resolving disputes domestically, which contradicts international norms that favour neutral, third-party arbitration. Moazzem also praised the government’s decision to make public the data and documents on power plants.