The Centre for Policy Dialogue (CPD) has called to immediately float tenders for 37 renewable energy-based power projects that were cancelled by the interim government.

Without bidding, these projects were awarded by the previous Awami League government under the controversial "Speedy Enhancement of Power and Energy Supply (Special Provision) Act, 2010".

At a dialogue in Dhaka yesterday, local think tank CPD proposed that the tenders be floated using the "reverse auction" method, which means multiple suppliers will bid and the lowest price quote would win the contract.

After the political changeover in August, the interim government scrapped a total of 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.

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"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 was speaking 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.

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.

To reduce the prevailing fiscal and financial burden, the interim government has justifiably repealed the Speedy Supply Act for future public procurement under the Ministry of Power, Energy, and Mineral Resources as well as for contracts that have not yet entered the construction phase, he added.

The decision to maintain public procurement rules will allow for open, transparent and competitive purchasing in the power and energy sector, Moazzem said.

The CPD also advocated for attracting Chinese investment in renewable projects.

Moazzem said that since the interim government has decided to adopt an open and competitive tendering process for new power plants, this would present a number of opportunities for Chinese investors and financiers.

At the same time, the ministry is expected to secure better deals compared to the cancelled ones, he said.

"The Power Development Board (PDB) is now 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, 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 in the form of loans, equity, technical assistance and financial aid.

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According to him, Chinese investors prefer using 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.

"Chinese investors usually do not engage in the planning phase of renewable energy projects. They prefer local private firms or the government to plan projects and then bid for investment and equipment supply," Moazzem said.

He believes if Chinese companies get involved, local investors can apply for financing from Chinese institutions.

Moazzem also highlighted some risks and challenges for foreign investors.

"There are some key risks that 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."

A 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, he said.

Moazzem also praised the government's decision to make public the data and documents on power plants.

"This is very important for us. The previous regime's culture was highly non-transparent and we could not access contract documents. It was biased towards the political party's interests and was conducted in a very unconsolidated and uncompetitive manner," he said.

At the event, Gan Peng, chairman of Chint Solar (Bangladesh) Co Ltd, expressed concern about 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.

Echoing similar sentiments, Shafiqul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis, called on the interim government to reduce import duties to encourage foreign investors.

Md Ariful Hoque, director general of the Bangladesh Investment Development Authority, said that they have a 24/7 virtual service portal for investors, including a dedicated desk for Chinese investors.

Regarding renewable energy projects, he expressed concern over land availability.

"Nearly three acres of land is required to generate one megawatt of power. In that context, as a land-scarce country, we have challenges in agriculture and other areas," Hoque said.

He suggested utilising unused land in economic zones and gardens.

Md Abdur Rahman Khan, chairman of the National Board of Revenue (NBR), assured those present that the government would not change its policies unless it was "very necessary".

"I can give you a commitment that we will try our best to maintain this consistency," he said.

Khan also encouraged businesses to report any harassment or hurdles through the online Grievance Redressal System (GRS).

Regarding tax exemptions, he said the revenue board needs to reduce tax expenditure to balance the tax-GDP ratio, which has been recommended for years by think tanks, economists and civil society.

"This does not mean that we will eliminate all existing tax benefits. Definitely not. We have to set our priorities," he said.

Fahmida Khatun, executive director of the CPD, moderated the event.