Nearly three dozen renewable-energy projects with around 3,287-megawatt generation capacity are now stalled at the final stage of inking power purchase agreements (PPAs) with a state power agency.
Sources say with initial government consent before the August changeover, the private entrepreneurs were about to enter into PPAs with state-run Bangladesh Power Development Board (BPDB). But now the process faces delays.
Bangladesh's overreliance on imports of fossil fuels will escalate further if these projects do not get approval for quick start, relevant sponsors fear.
Once implemented, these projects will help the country to ease ever-escalating capacity-payment burdens as all these renewable-power projects will be implemented under 'no electricity, no payment' mechanism with no capacity -payment provisions, they point out.
The circles concerned, however, suggested proper probe into the status of the solar power projects---whether they got approvals bypassing competition under the much talked-about indemnity law.
These projects are aimed at checking Bangladesh's growing over-dependence on the imports of 'expensive' fossil fuels like liquefied natural gas (LNG), petroleum products and coal, to ensure the country's future energy security, a senior Power Division official told the FE Saturday, preferring anonymity.
"The initial works of these renewable projects got momentum a couple of years back against the backdrop of scarcity of conventional fuels like petroleum products, natural gas, and LNG and their soaring prices on the international market after the outbreak of Russia-Ukraine war," he says.
The ongoing Russia-Ukraine war exposed a new dimension of primary-energy situation across the globe, which had prompted Bangladesh to expedite the move to increase the share of renewable energy in the overall electricity- output basket, he adds.
Bangladesh had to stop purchasing LNG from spot market and reduce imports of diesel, furnace oil and coal under an austerity measure, resulting in enforcement of load-shedding.
The country is already struggling to foot mounting energy-import bills worth around US$2.20 billion and sought budgetary support from the multilateral donor agencies, including the World Bank, to get fiscal support.
"Foreign direct investments (FDIs) worth around US$4.5 billion will be at risk and initial investments worth around US$200 million will go down the drain with further delaying of these project works," general secretary of Bangladesh Sustainable and Renewable Energy Association (BSREA) Tofael Ahmed told the FE Saturday.
He said these renewable -energy projects were initiated during the previous government and most of the project sponsors obtained letter of intent (LOI) from the Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) several months back and were waiting to ink PPAs with the BPDB and implementation agreements with the government.
But the fall of the deposed Sheikh Hasina regime on August 5 pushed these projects into 'uncertainty' as the interim government has decided to halt further negotiations over the projects that were in the process of final approval under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010.
"We are yet to get any formal letter from the government over the halting of the renewable-energy projects that are in the pipeline of implementation," said senior vice president of Bangladesh Sustainable and Renewable Energy Association (BSREA) Mostafa Al Mahmud. "But if the government decides to scrap these LOIs, it will be suicidal," he said.
The issuance of LOIs by the Power Division to these renewable power plants meant the government intended and agreed to ink final deals with the project sponsors to move forward with these projects, he said. In the process of obtaining LOIs, the private-sector entrepreneurs have invested around US$200 million from foreign lenders through banking channels, he mentioned.
For full implementation of these projects foreign direct investments (FDIs) worth around US$4.5 billion from different countries, including China, France, Malaysia, Singapore, South Korea, Germany, Japan, the USA, the UAE and Saudi Arabia, are in the pipeline, he said.
The renewable-energy sponsors also purchased and acquired necessary lands, constituted respective special purpose vehicles (SPVs), carried out feasibility studies and were at the final stage of financial closures, said Mr Mahmud.
Although these renewable -energy projects attained approval during the previous government, due diligence was followed during the process of selecting sponsors, he said.
"The interim government can scrutinize further the selection process to ensure transparency and accountability," said the BSREA leader, adding that the tariff rates of all the solar-power plants is very competitive and below 10 US cents per kilowatt-hour.
Besides, half a dozen project sponsors have already completed 100-percent purchase of required lands as they achieved the 'go ahead' from the previous government. Mr Mahmud said all sorts of renewable-energy projects are among the projects that obtained LOIs, he said, adding that 2,942 MWs are of solar plants, 320 MWs wind-based power plants and the remaining 25 MWs are of waste-to-energy projects.
Foreign investors have already invested a portion of their committed investments to carry out initial works. They will pour in further funds after the inking of the PPAs and IAs, he said.
He notes that if the interim government goes for scrapping LOIs, a negative message will go to the foreign investors.
"If new tenders are floated, the foreign investors might not come up again due to erosion of confidence and loss of their invested money," the BSREA top brass fears. And it will be time-consuming, too.
Most of the project sponsors are genuine businessmen, said Mr Mahmud.
"To avoid controversy the government can cancel some projects that were awarded on political grounds, including those of former foreign minister Hasan Mahmud, former state minister for shipping Khalid Mahmud Chowdhury and former religion minister Faridul Haque Khan Dulal," he suggests.
Sources said there could be some more projects that took recourse to dubious means to get approval and those need to be dentified.
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