On August 27, the Ministry of Power, Energy, and Mineral Resources of Bangladesh’s caretaker government canceled contracts for 42 power plant projects, including 37 renewable energy plants. These plants were either still in the pilot stage or had obtained letters of intent from the Bangladesh Power Development Board (BPDB), indicating their compliance and readiness for construction.
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Some of the canceled contracts had already been signed, while others were in the bidding stage according to the Speedy Enhancement of Power and Energy Supply (Special) Act 2010, passed by the previous government, which allowed the ministry to accept non-bid contract arrangements. The caretaker government announced that all future public procurements will follow open bidding processes with a focus on enhanced transparency.
Among the canceled projects, 30 were being implemented by investors from 15 different countries through joint ventures or the build-own-operate model, where private companies purchase the construction and operational rights of power plant projects for a certain period.
Some investors, including overseas investors who had received letters of intent, had invested significant funds in their projects, estimated to total US$200 million. If the government does not reconsider its stance on these projects, its decision to cancel them may lead to legal disputes.
Moreover, canceling so many renewable energy projects without providing alternatives may give investors the impression that the caretaker government is not fully committed to developing clean energy, which could overshadow other initiatives to stimulate renewable energy investment.
However, as we recently stated at the Bangladesh-China Renewable Energy Forum, we believe a win-win solution is still possible. The caretaker government can adopt a “reverse auction” method, where the lowest bidder wins, to tender for new renewable energy projects among investors of canceled projects and use open bidding procedures for future renewable energy project tenders. Adopting both measures will reassure overseas investors and those wishing to invest in Bangladesh’s renewable energy sector while minimizing the impact of the projects.
Doing so will build investors’ confidence in the caretaker government and Bangladesh’s business environment, actively promoting the development of renewable energy in Bangladesh. China is the world’s largest investor in renewable energy and leads in investments in Bangladesh’s renewable energy sector, so it is particularly important to alleviate the concerns of potential Chinese investors.
