Center for Policy Dialogue (CPD) has said on Monday that any sudden decisions during government transitions erode investor trust, increase financial costs for future infrastructure projects, and delay the energy transition.
It said, a calm, steady approach will protect Bangladesh's long-term goals and reputation as overseas investment is essential for Bangladesh's growth, especially in the renewable energy sector.
It also urged the interim government to reconsider its recent decision to cancel 37 solar power plant projects, warning that the move could severely undermine investors' confidence, particularly among Chinese stakeholders.
CPD's Research Director Dr Khondaker Golam Moazzem made these remarks during a seminar titled 'Recent Challenges for Chinese Overseas Investment in Bangladesh's Renewable Energy Sector: Way Forward', held at a hotel here.
Taking part in the discussion, Han Kun, president of the Chinese Enterprises Association in Bangladesh, said the government's policy of renegotiating tariffs in the power sector is a disaster for investors looking to invest in Bangladesh.
However, CPD warned that the government's decision sends a negative message to the international investment community, particularly at a time when Bangladesh is seeking
to expand its renewable energy capacity.
The cancelled projects, worth over US $6 billion and totalling more than 3,287 megawatts in capacity, were approved under the previous Awami League government.
The interim administration has cited political considerations and allegations of irregularities as reasons for the cancellation.
China's investment in the renewable energy sector is over 50 per cent of the total investment.
Chinese investments are among the largest in Bangladesh - totaling US$2.65 billion (including Hong Kong), it constitutes 15.1 per cent of Bangladesh's total foreign direct investment (FDI) stock in 2024.
"When we made the investment and the plant was ready for commercial operation, we were suddenly informed that tariff structures were going to be changed. Your terms and conditions are changed; that is a disaster for investors who have already invested in power projects," Han Kun said citing the Patuakhali 1320 MW power plant, the Barishal coal-fired power plant, and the SSI power plant recently received notices to renegotiate the tariff structures outlined in existing power purchase agreements (PPAs).
He also said such decisions are discouraging to new investors, adding, "When someone hears that after making an investment, the deal will be renegotiated again, new investors will not come to Bangladesh easily."
Presenting the keynote paper and Programme Associate Abrar Ahammed Bhuiyan noted that 15 of the affected companies had already acquired land, meaning the cancellations could lead to financial and legal complications.
Sudden policy shifts during political change, abrupt decision to renegotiate tariffs inadvertently signals unpredictability to international investors which snatches long-term investor confidence.
He also claimed that "citing the reason of a delay in providing a performance bond, $1.45 million was deducted from the original payment for a Chinese-funded power plant, although there was no such penalty clause in the PPA. The Barishal coal-fired power plant is also experiencing arbitrary payment deductions."
"The 1320 MW SSI power plant is experiencing delayed payments of more than $200 million."
The CPD identified key challenges such as administrative and project implementation issues and land development complexities as major barriers to attracting foreign investment in Bangladesh's renewable energy sector.
Khandaker Golam Moazzem, research director at CPD, and Abrar Ahammed Bhuiyan jointly presented the keynote presentation.
Jalal Ahmed, chairman of the Bangladesh Energy Regulatory Commission (BERC), attended as a special guest, while Nahian Rahman Rochi, head of business development at the Bangladesh Investment Development Authority (BIDA), and Mohammad Alauddin, rector of the Bangladesh Power Management Institute, were present as guests of honour.
Other speakers included Engr Md Muzibur Rahman, director of Renewable Energy Development at SREDA; Gobindha Chandra Laha, chief engineer (Planning and Design) at the Bangladesh Power Development Board; and Mostafa Al Mahmud, president of the Bangladesh Sustainable and Renewable Energy Association.
In his keynote presentation, Khandaker Golam Moazzem identified partial digitalisation, complex norms, and lack of coordination among multiple agencies as major barriers discouraging potential investors in the renewable energy sector.
Wang Weiquan, deputy secretary general of the Chinese Renewable Energy Industries Association, said China had established a comprehensive framework that includes sustainable energy development goals supported by national policy.
"Facilitating incentives, fixed tariff structures, total volume purchases, and special fund policies paved the way for investment in China's renewable energy sector. Numerous five-year plans, such as solar and hydrogen policies, gave a positive signal to the market and helped attract investors," Wang said.
Regarding the cancellation of Letters of Intent (LoI) for 37 solar-based power plants, SK Md Ruhul Amin, deputy managing director of Chint Solar (Bangladesh) Company Ltd, said these plants were cancelled citing corruption allegations, but "we don't know at which stage the corruption took place."
"After getting government approval, we purchased land and transferred funds to the bank. Despite doing everything necessary, we have not been provided any solution regarding the cancelled power plants," Ruhul Amin added.
Officials from both the public and private sectors stressed that policy inconsistency, land acquisition difficulties, and bureaucratic hurdles are key barriers to realising Bangladesh's renewable energy goals.
Bangladesh fixed a target to generate 20 percent of its electricity from renewable sources by 2030, rising to 30 percent by 2040. This will require annual investments of nearly US $1 billion through the end of the decade, and even more in subsequent years.
