Renewable energy investors call for better policies to attract FDI

Investors in the sector have expressed concern that suddenly cancelling all the solar power plant projects, which have been approved and are in progress, will discourage foreign investors from entering this sector.

They have said the interim government should have consulted with private sector stakeholders before making any decision as continuity in policy is necessary to attract investment.

They made the observation today (12 December) while speaking on the second day of the second conference "Bangladesh Energy Prosperity 2050", organised by the Bangladesh Working Group on External Debt (BWGED), in Dhaka.

The three-day event, which began on Wednesday (11 December) at the BIAM Foundation, emphasises transitioning to renewable energy and achieving a sustainable power policy amid critical global and domestic challenges.

Speaking at the parallel session on "Investment for Energy Transition: Potential and Challenges," Imranul Hoque Chowdhury, head of Business Development at TotalEnergies Renewables, expressed his concerns over the cancellations.

He said, "The impact of this decision affects not only Bangladesh but also foreign investors. In Bangladesh's renewable energy sector, foreign investment may account for no more than 10%. This is because investors are concerned about the frequent changes following the government transition and the lack of stable policies."

At the event, it was announced that the Ministry of Power, Energy, and Mineral Resources has decided to cancel 42 power plant projects, including 37 renewable energy projects. These projects involved investors from 15 countries, including China.

None of these projects went through open tenders, but the government now plans to award them through an open tender process.

Imranul said he also wanted the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act to be cancelled. "However, we need to consider the fact that this is also related to renewable energy. The government should have consulted with the private sector before making any decisions.

"When I heard that these renewable energy projects were being cancelled, it shocked me to my core."

He said, "For a successful energy transition, we need stable policies. Regardless of which government is in power, whenever a policy is being made, the private sector must be involved. In our country, policies are made by academics and government officials, but private sector investors are not included. We must involve the private sector, or else the policy will stay on paper and not be implemented."

Abu Hena Mostofa Kamal, head of Regulatory Affairs and Land at Hero Future Energies, said, "Foreign investors need to invest around $100 million for a renewable power project. Many have already invested in the projects that are being cancelled. If there is no protection for these investments, investors will move to other countries."

He added, "The International Finance Corporation (IFC) and KKR provide us with funding. They are saying that investing in Bangladesh's energy sector is not currently investment-friendly, and they want to be more cautious. They do not see future potential for our investments."

Kamal continued, "The government aims to produce 40% of electricity from clean and renewable energy by 2041. An investment of $25 billion is required by 2030. Therefore, a policy that is friendly to investors and ensures continuity is necessary."

He added, "There are bureaucratic delays here. It takes about 3 years to get approval for a renewable energy project, and moving files between ministries takes a lot of time. It took us 2 years to get land approval from the deputy commissioners. We need a One Stop Service for this."

Another session on fair and sustainable financing highlighted the need for improved accountability, compliance, and safeguarding in the financial sector.

It also stressed the importance of aligning Bangladesh's taxonomy with global standards and ensuring that banks publish financial policies, project documents, and ESG (environmental, social, and governance) reports.

'IEPMP designed to maximise Japanese companies' profits'

In another session, titled "Role of Bilateral Partnerships for Just Transition in Bangladesh," Yuki Tanabe, program director of Japan Center for Sustainable Environment and Society, criticised the Integrated Energy and Power Master Plan (IEPMP), according to a press release.

He said, "The power plan is designed to maximise the profits of Japanese companies and is simply a scheme for Japan to re-sell their surplus LNG to Asian countries, including Bangladesh."

He argued that the power plan is economically unviable, as it includes 15% ammonia and hydrogen co-firing by 2050, which is four times more expensive than renewables.

"The IEPMP is not suitable for a developing country like Bangladesh. It relies on false solutions under the guise of advanced technologies, which are very costly compared to renewables. Therefore, the IEPMP needs significant revision, and Japan should invest more in renewable energy to support Bangladesh's energy transition," Yuki said.

Ichiguchi Tomohide, chief representative of JICA in Bangladesh, stressed caution regarding hydrogen and ammonia projects. "Once these projects are tested and technological advancements are ensured, we can update Bangladesh's power master plan accordingly," he said.

He also supported revising the IEPMP, echoing the energy advisor's advice from the conference's inaugural ceremony. "The power master plan is a living document. As economic scenarios change, so should the master plan. JICA has supported and will continue to support Bangladesh in achieving renewable energy goals and improving energy efficiency," Ichiguchi added.