Special Report :
Bangladesh’s renewable energy sector has been thrown into turmoil following the abrupt cancellation of agreements with 31 companies by the Bangladesh Power Development Board (BPDB) that were signed during the dictatorship led by recently fled Sheikh Hasina.
The decision, made under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 that bypasses competitive bidding process, has sparked legal challenges and raised concerns about the country’s green energy future.
On November 14, 2024, the High Court struck down two key provisions of the Act, including Section 6(2), which had allowed the power minister to bypass competitive bidding in power purchase agreements.
However, the full judgment, released on November 24, permitted existing projects to continue while requiring investigations into any irregularities before further action.
Despite this ruling, the BPDB issued cancellation letters to 31 companies on November 18, stating that the government would no longer purchase electricity from them.
This decision came even though many companies had already secured land and made significant preparations.
Then, on December 5, the BPDB invited new tenders for some of these projects – a move companies argue violates the High Court’s directive.
Government now wants to bring transparency and introduce competitive tendering process to reduce unjustifiable tariffs.
Dr. Fouzal Kabir Khan, the advisor for this sector who is an economist by training after receiving his PhD from Boston University wants to improve the competitiveness of the power and energy sector of the country.
Fifteen affected companies have filed 11 separate writ petitions against the BPDB’s decision.
The cancelled projects, which aimed to generate 3,287MW of renewable energy, had attracted $6 billion in foreign investment.
Many companies had secured Letters of Intent (LoI) and were in the process of obtaining local bank loans.
However, a large number of companies failed to meet essential contractual requirements, including:
1. Providing the required performance guarantees (bank guarantees as proposal security).
2. Arranging land for project development within the stipulated time.
3. Submitting initialed project agreements and incorporation documents on time.
Under the terms of the LoIs, BPDB reserves the right to terminate the LoI and forfeit the proposal security if a company fails to furnish the following documents within the specified time from issuance:
l Unconditional acceptance of the LoI within seven (7) days.
l Unconditional bank guarantee(s) as proposal security within fifteen (15) days.
l Initialed project agreements within forty-five (45) days.
l Certificate of Incorporation (along with Memorandum and Articles of Association) for the newly formed company in Bangladesh within forty-five (45) days.
While some companies genuinely intended to develop renewable projects, others exploited the system by using the LoIs as a tradeable tool to make quick profits from foreign investors.
Instead of securing financing and beginning project execution, these companies sought to sell their LoIs to international investors, using them as leverage to attract funding without fulfilling contractual obligations.
This misuse of LoIs resulted in delays, lack of genuine investment, and an overall weakening of Bangladesh’s renewable energy sector.
Experts argue that such practices damaged investor confidence and contributed to the government’s decision to reassess and cancel non-compliant projects.
Legal representatives argue that while BPDB had the right to terminate LoIs under these conditions, a proper review process should have been conducted before cancelling all projects.
Barrister Ahsanul Karim, representing several petitioners, stated,
“The BPDB should have formed a review committee to investigate irregularities before cancelling all projects indiscriminately.”
The government defends its actions, asserting that the LoIs were not binding contracts and that companies are free to bid in the new tenders.
Muhammad Fouzul Kabir Khan, Power, Energy, and Mineral Resources Affairs Adviser, stated:
“The Letters of Intent (LoIs) issued to these 31 solar power plants were not final contracts.”
However, industry experts warn of serious consequences. The cancelled projects, including solar and wind power plants, were expected to reduce Bangladesh’s reliance on expensive fossil fuel imports.
There are fears that if foreign investors withdraw funding, the country may struggle to meet its renewable energy goals, leading to greater dependence on oil and LNG-based power generation.
The controversy has also shaken investor confidence, particularly among companies from China, France, Malaysia, Singapore, South Korea, Germany, Japan, the USA, the UAE, and Saudi Arabia, who had committed billions of dollars to these projects. Many are now reconsidering their investments due to regulatory instability.
Economist Dr. Khondaker Golam Moazzem of the Centre for Policy Dialogue (CPD) suggested that the government could have taken a more balanced approach, “If irregularities were found, the government should have taken action against specific cases rather than cancelling all projects. A better approach would have been to renegotiate contracts where necessary.”
The legal battle has taken a new turn after Justices Farah Mahbub and Debasish Roy Chowdhury unexpectedly recused themselves from a petition filed by Joules Power Limited following allegations of external influence. The case has now been sent to the Chief Justice for reassignment.
Amidst the uncertainty, energy policy experts are calling for major reforms to prevent similar crises.
The CPD has recommended repealing the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 and aligning energy procurement with the Public Procurement Act (PPA) and Public Procurement Rules (PPR) to improve transparency.
Dr. Moazzem further suggested:
l Removing politically appointed officials from energy companies.
l Implementing reverse auctions for future tenders.
l Conducting international audits of power sector financial reports.
l Prioritizing renewable energy expansion to meet climate commitments while maintaining investor trust.
With billions of dollars at stake and 31 projects in limbo, the next steps taken by the government and judiciary to introduce competitive bidding process and transparency will shape the future of Bangladesh’s renewable energy sector.
The outcome of these legal battles will determine whether the country can restore investor confidence and maintain its renewable energy ambitions.
