Frequent policy changes and inadequate preparation for a credible procurement process have shaken the confidence of both local and foreign firms investing in Bangladesh’s renewable energy sector, businesses have said.
They made the remarks while speaking at the launch of a survey report on ongoing reforms to the Public Procurement Act (PPA) and Public Procurement Regulations (PPR), organised by the Centre for Policy Dialogue (CPD) at the BRAC Centre in the capital on Monday.
David Hasnat, president of the Bangladesh Independent Power Producers’ Association (BIPPA), said, “Although the amended PPA and PPR have improved transparency, they lack stability, as any succeeding government can repeal them at any time.”
“As a result, investors are becoming increasingly hesitant to invest here,” he added.
Former BIPPA president Imran Karim and GSOLARIC Bangladesh Ltd managing director Naznin Akter echoed similar views.
Han Kum, president of the Chinese Entrepreneurs Association in Bangladesh, said green energy will be critically important for Bangladesh’s industrial sector – particularly the garment industry – in the coming years.
“As green energy-based factories will soon become a key requirement for buyers in European markets, Bangladesh must adopt sustainable, investment-friendly and transparent policies for this sector,” he added.
Muhammad Fouzul Kabir Khan, adviser to the Ministry of Power, Energy and Mineral Resources, said the government is trying to pull this long-corrupt sector back on track.
“Setting lower tariffs in the renewable energy sector compared to the past will encourage investors to come forward. The tariffs will be reduced further in the future,” he added.
What the CPD survey finds
The CPD’s survey shows that the shift from unsolicited contracts to competitive bidding under the PPA and PPR is a step toward ensuring transparency and accountability, but the implementing agencies remain unprepared to execute an efficient and credible procurement process for renewable energy projects.
Participation in recent solar tenders has remained low due to structural bottlenecks and procedural uncertainties, it said.
The study also suggested revising project-size thresholds in future utility-scale solar tenders to create opportunities for a wider pool of bidders.
According to the survey, of the 105 firms reviewed during the tenure of the interim government, 48 firms (45.7%) purchased tender documents but did not submit bids, 44 firms (41.9%) both purchased and submitted bids, while 13 firms (12.4%) did not purchase tender documents at all.
Due to strict financial capacity requirements, bidding was concentrated around small and medium-sized packages (50–100 MW). Larger projects – including those of 105 MW, 130 MW, 240 MW and 250 MW – received few or no bids.
Following this, the CPD recommended easing these requirements to attract more investors.
While the annual turnover requirements are comparable to South Asian standards, Bangladesh’s working capital requirement is significantly higher – $1.14 million per MW, compared with just $0.1-$0.15 million per MW in India. As a result, most foreign firms can meet the criteria while many local firms struggle, the report said.
Land-related challenges emerged as another barrier. Firms are solely responsible for land acquisition and development – a burdensome obligation given the country’s land scarcity and complex bureaucratic processes, it noted.
Firms also flagged unrealistic generation requirements, such as the fixed target of 10.95 crore kWh annually for a 50 MW project over 20 years – a condition that 76% of respondents described as impractical.
Even so, competitive bidding has helped lower tariffs. The average tariff offered by firms whose Letters of Intent (LoI) were cancelled earlier stood at $0.107 per kWh, whereas competitive bidding brought it down to $0.08 – a 24.6% reduction.
Concerns about transparency persisted. Around 41% of firms reported occasional leakage of other bidders’ financial information. Only 30% rated the evaluation process as moderately transparent, while 27.3% viewed it as slightly transparent.
Additionally, 46% of participating firms – including all foreign firms and the joint ventures – reported experiencing discriminatory treatment during the process.
