The absence of government payment guarantees has become a serious concern for private-sector solar power projects, with at least three plants facing prolonged delays in securing foreign financing despite finalising loan negotiations with international lenders.
Project developers say lenders such as the Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA) have agreed in principle to fund the projects.
However, the lenders are refusing to release the money without sovereign guarantees from the government, despite such assurances being part of the original power purchase agreements (PPAs), they add.
Of the three projects, one power plant has been supplying electricity to the national grid for the past 18 months, another is preparing to begin commercial operations this May, and construction of the third has slowed significantly due to uncertainty over foreign financing.
Sources said ADB and JICA had agreed to invest in three private-sector solar power plants -- a 100-megawatt plant owned by Dynamic Sun Energy Power Limited, a 20MW solar plant owned by Joules Power Limited, and a 50MW plant owned by Germany-based firm ib vogt.
For Dynamic Sun's project in Pabna, the two foreign lenders agreed to invest $121 million. Talks were also underway for a $65 million investment in Sonagazi Solar Power Limited and $24.3 million for Joules Power's Muktagacha Solartech Energy Limited (MSEL).
However, hopes for these investments have dimmed as the interim administration did not provide the required "government guarantee" to secure the foreign funds, and the issue remains unresolved even after the new political government took office.
The government had committed to providing such guarantees while signing power purchase agreements (PPAs) with the project developers, enabling them to secure foreign loans for their plants.
ADB and JICA recently informed Dynamic Sun Energy Power Limited that the loan would not be released unless the company could obtain the government guarantee by this June.
In a recent letter to the energy minister, Dynamic Sun authorities expressed frustration over the delay, saying the failure to obtain the guarantee had stalled ADB and JICA financing for the company.
The company said it had been trying to secure the payment guarantee from the government since February 2025, but without success.
"Due to the prolonged delay in obtaining the payment guarantee, around Tk 6.95 billion in local loans and $107.72 million in UPAS LC loans for importing capital machinery have become overdue, causing significant financial losses to Paramount Group," the letter stated.
The company sought the energy minister's intervention to ensure the payment guarantee in line with the implementation agreement so that the ADB and JICA loans could be released. "If the fund is released, the company will be able to repay loans taken from local banks, which will also help the country at a time when it is facing a shortage of foreign currency," the letter added.
Contacted, a Power Division official declined to comment on the delay in providing government guarantees to the solar power companies.
Md Mehedi Hasan, a senior investment officer at ADB, told The Financial Express that the government made a commitment to provide guarantees so that the developers can get loans for the projects.
"We processed the loans as per clauses of the implementation agreement," he said, informing that the guarantee has not yet been issued. "We cannot disburse the fund without a government guarantee."
At an event on renewable energy in Dhaka last Monday, speakers repeatedly urged the energy minister to ensure government guarantees to attract foreign investment.
"If you want foreign investment, you certainly have to provide government guarantees," said Han Kun, president of the Chinese Enterprises Association in Bangladesh.
Alamgir Morshed, executive director of the Infrastructure Development Company Limited (IDCOL), also underscored the importance of sovereign guarantees for attracting investment.
"A project cannot be bankable without a government guarantee," he said.
syful-islam@outlook.com
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