Thursday | 20 February 2025 | Reg No- 06
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Thursday | 20 February 2025 | Epaper

CPD for dedicated currency conversion channel for renewable energy investors

Published : Friday, 18 October, 2024 at 12:00 AM  Count : 367
 
The Centre for Policy Dialogue (CPD) has said on Thursday that the government may issue tenders for new power plant projects using the 'reverse auction' method.
The 37 cancelled renewable energy-based power plant projects, including those backed by Chinese investment, could submit their proposals for 'reverse auction,' according to CPD Research Director Khondaker Golam Moazzem in his presentation.

To mitigate currency risks, he suggested that the Bangladesh government establish a fund offering hedging products, subsidised currency swaps and partial guarantees for foreign exchange losses. "This would immediately provide a safety net for Chinese investors concerned about currency fluctuations. Local banks should be encouraged to offer credit in Taka," he added.

During the discussion, speakers urged the government to simplify the process of doing business in Bangladesh. "Please simplify project approvals, provide tax incentives, reduce duties and excise, and ensure political and economic stability to attract overseas investment, particularly in the renewable energy sector," they said.

CPD hosted the event at a Dhaka hotel, focusing on overseas investment, particularly from China, in the renewable energy sector. Khondaker Golam Moazzem highlighted the need for foreign investment to achieve Bangladesh's renewable energy goals and the associated challenges.

Citing estimates from the Institute for Energy Economics and Financial Analysis (IEEFA), he noted that Bangladesh requires $1.5-1.71 billion annually to meet its target of 40% renewable energy-based power generation by 2041. He pointed out that the country's traditional fiscal and financial instruments are insufficient to attract large-scale overseas investment.

He recommended several immediate and long-term solutions, including incentivising foreign investors to use Taka-denominated bonds, creating a stabilised fund, establishing bilateral currency swap agreements with key partners, promoting public-private partnerships with government-backed financial guarantees, and ensuring quick dispute resolution through international arbitration standards.

Speaking virtually, Chint Solar (Bangladesh) Chairman Gan Peng raised concerns over the cancellation of around 35 renewable power projects that had already been granted a Line of Intent (LOI). "Attracting Chinese investment is not difficult, but realising it is challenging. If Bangladesh needs Chinese investment in renewables, the LOI-secured projects must receive the green light," he said.

Several government dignitaries, including National Board of Revenue (NBR) Chairman Abdur Rahman Khan, participated in the event. Khan assured investors of consistent policy support, stating, "No investors are afraid of tax; they need consistent policies, and NBR will try its best to maintain consistency."

Bangladesh is currently undergoing an energy transition under the new government, requiring significant investment in the renewable energy sector. The discussion highlighted overseas Chinese investment as a major source of finance, given China's global leadership in the sector.

Shahidur Rahman, Country Manager of Jinko Solar Bangladesh, called for tax incentives and a streamlined project approval process. IEEFA's Lead Energy Analyst, Shafiqul Alam, also made recommendations, including 'investment-ready industrial plots and an expanded power transmission network.'

The event was chaired by CPD Executive Director Fahmida Khatun. Other speakers included Chowdhury Liakat Ali, Director of the Sustainable Finance Department at Bangladesh Bank; Ariful Hoque, Director General at Bangladesh Investment Development Authority (BIDA); and Syeda Afzalun Nessa, Head of Sustainability at the Hongkong and Shanghai Banking Corporation.



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