Renewable Energy Sector: ‘Cash flow key to drawing investment’

Staff Reporter :

Power, Energy and Mineral Resources Adviser Fouzul Kabir Khan has stressed that maintaining a healthy and reliable cash flow is the single most important factor in attracting investors to Bangladesh’s renewable energy industry.

During an online dialogue titled “Recent Procurement Initiatives of Renewable Energy in the Power Sector: CPD Study Findings”, hosted by the Centre for Policy Dialogue (CPD) at BRAC Inn on Monday, he defended the government’s recent move to cancel Implementation Agreements (IAs) for 34 solar power projects.

Fouzul Kabir argued that the IAs had become outdated and ineffective. “The Implementation Agreement isn’t even worth the paper it’s written on. No one has ever asked to enforce it. We cancelled the IA with full confidence,” he said. He noted that both the PPA and IA models originated in the 1990s and no longer match the realities of today’s renewable energy landscape.

Explaining the government’s shift away from IAs, he emphasized that investors are focused above all on consistent revenue. “For investors, it’s cash flow-nothing is more important. To ensure long-term stability for all parties, we must secure steady cash flow so both costs and revenues remain manageable,” he said.

He added that the government is moving toward direct procurement for new renewable energy acquisitions. Discussions with banks and IDCOL are underway to ensure upcoming projects are financially viable. “We have already notified the Banking Division to extend the required facilities, and we are working with IDCOL to arrange guarantee schemes,” he said.

Pointing to structural weaknesses in the power sector, he said that bypassing competitive bidding and relying on direct negotiations in previous years created a “vicious cycle” of high tariffs and unpaid dues. “All unsolicited power deals came with high tariffs. Because BPDB couldn’t afford those rates, unpaid bills accumulated,” he explained.

He noted that the interim government has already cleared $3.2 billion in overdue energy import payments that had piled up, as suppliers were imposing penalties and higher prices due to delayed payments.

New solar projects with much lower tariff rates have now been submitted to the purchase committee for approval, marking a departure from past practices. “We are trying to move away from a corrupt system and shift beyond the 2010 Power and Energy Act,” he said.

He added that confusion over PPAs and IAs persists because the sector has long been dependent on those outdated contractual structures.