Scrapping RE projects of past regime

FE Team | Published: October 19, 2024 20:43:29

The government has decided to scrap 37 renewable energy (RE) deals that had been struck during Awami League government's last tenure under the 'Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 (extended till 2025). The operation of this dark law has been suspended by the present government and it is in line with that decision that these RE projects have also been offloaded. The current government has embarked on an extensive fact-finding mission to review all major deals struck under the suspended Act because this particular law didn't have any oversight to speak of. These were deals that were concluded without the benefit of a tendering process and need to be revisited. Although the tenure of this government has just passed the two-month mark, it has come across some major irregularities committed during the past government that have surfaced as to the murkiness of deals made that have all the hallmarks of alleged corruption involved in the inking of deals.
A seminar organised by the Centre for Policy Dialogue (CPD) last week brought together various stakeholders to discuss the future of RE in the energy mix and expediting foreign direct investment to help achieve energy targets by 2041. Regardless of ruffled feathers by existing investors who have poured money into these RE projects, let there be no doubt that awarded RE projects cannot stand. Their cancellation and the proposal to introduce fresh bids under 'reverse auction' method is one way to move forward. It is in the national interest to promote renewable energy because using oil to produce power is not only very uneconomical (oil needs to be imported), but is also environmentally-polluting.
The previous government had already issued necessary letters of intent (LoIs) and the investors were working on the projects awarded under the controversial Act, but the interim government cancelled the projects immediately after assuming office. "The cancellation of the projects sent mixed signals to the foreign investors," the meeting was told, stressing the urgent need for removing all bottlenecks hindering foreign investment in the sector. Regardless of what mixed message it has sent out, the fact is that a rebid is the right course of action in the national interest.
While it is true that there is urgent need to ramp up RE generation to meet energy transition, it is estimated that US$1.5 billion yearly investment will be required to meet the 2041 goals. Today only 4.5 per cent of the country's energy mix is met by RE, but that is hardly any excuse to let these dubious contracts be pressed into commission. Since, fresh tenders are in the offing to set up renewable power plants, those who have had their projects cancelled can participate and compete with others to try and win RE contracts.
It is understandable that those who have lost contracts are upset. But the government has taken the right move because all these unsolicited bids in the energy sector, not just the RE ones, but major deals on power plants that were concluded over the last 15 years followed no transparent process. The country is now paying the price for the billions of dollars taken in loans to pay for generating power much of it that is not even needed. The national exchequer is bleeding dry paying out billions of dollars in expensive foreign loan repayments, money it can ill afford to spare but that is the price this nation has paid for the flawed and corrupt energy policy that was followed for the last 15 years. Let the scrapping of these RE contracts be the first step in the right direction for energy planning in Bangladesh from this point on.