British statesman Winston Churchill once said that a pessimist sees difficulty in every opportunity and an optimist finds opportunity in every difficulty. The power sector of Bangladesh is now at such a juncture.

By 2030, the government is aiming to more-than-triple its installed power generation capacity to 38,700 megawatts to befit its growth ambitions -- an exercise that will require about $55 billion of investment.

“It's a challenge and an opportunity for investors,” said Mohammad Hossain, director general of the power ministry's power cell.

Getting the primary energy would be a big task, according to Humayun Rashid, managing director of Energypac Power Generation Ltd.

So prospective investors can look to get involved with coal, gas or fuel supplies, he said. “There would be steady returns on their investment for the next 15-20 years.”

Coal projects would be the ones to look out for down the line, according to Nazmul Haque, director of investment and head of advisory of Infrastructure Development Company Ltd (IDCOL).

After all, the government is looking to generate majority of the 38,700MW of electricity from coal, as the domestic gas reserves are fast depleting, Hossain said.

In the Power Sector Master Plan 2010, 19,650MW was earmarked under coal. But for the moment the government is focused more on setting up power plants running on imported coal, and it will be reflected when the Master Plan 2015 is revised this year.

For financing projects of up to 500MW, there is adequate domestic capacity now, but it is the larger ones, of about 1,300MW, that can be done with foreign investments, Haque said.

Environmental concerns though often hold back foreign investors from putting their money in coal projects.

But Hossain said that all coal projects in the pipeline are above 600MW and they are all based on the ultra-supercritical (USC) technology.

The USC technology requires less coal per megawatt-hour, leading to lower emissions (including carbon dioxide and mercury), higher efficiency and lower fuel costs per megawatt.

Besides, the power sector is one of the most well-structured sectors of the country, Haque said. “There is very little risk for investors, with the government bearing most of them, such as fluctuations in fuel prices in the world market.”

“It's a proven system. It has worked successfully for two decades which is why private participation is blooming in the sector,” Hossain said.

There is sovereign guarantee from the government and the Bangladesh Power Development Board has never defaulted on its payment.

Rashid, who runs an independent power plant, validated Hossain's claim, saying that the BPDB always makes sure to clear their dues on time.

“It is totally protected, so investors can be very comfortable. They are all bankable documents.”

He said the government needs to be lauded for taking this matter very seriously and doing it properly.

There is an attractive incentive package too for investors.

For instance, there is a tax holiday for 15 years and no value-added tax, customs duties and other surcharges on plants and equipment.

Repatriation of equity along with dividends is allowed, and the foreigners working in the plants are also not left out: they get tax exemption and repatriation facility on royalties, technical know-how and technical assistance fees.

Due to many bilateral agreements, double taxation would be avoided.

Other than generation, there are investment opportunities in transmission and distribution too.

The country is very much comfortable with the direction being taken for generation, but more needs to be done with transmission and distribution, Hossain said.

“It is not because of a lack of planning or vision. First you have to generate, then transmit and distribute. It is the sequence that things happen, and in the past we have not followed that.”

Before 2009, there were thousands of kilometres of transmission lines with no power to distribute.

To mitigate the transmission problem, the government plans on taking up independent system operators which will create scope for private investment. Some of the segments of the grid will be developed under a public-private partnership.

The distribution too would be opened up to the private sector.

Another area for investment is renewable energy.

The government has targeted to generate 3,000MW from renewable sources, but has managed only 175MW so far.

The achievement is not too encouraging, so there is enormous scope for foreign investors, Hossain added.