BD risks losing billions in Chinese RE investments

The Centre for Policy Dialogue (CPD) has cautioned that Bangladesh could lose billions in Chinese renewable-energy investments unless immediate steps are taken to streamline regulations and stabilise the investment climate.

This warning came during the third Bangladesh-China Renewable Energy Forum, held in the capital on Monday.

At the event, CPD researchers Dr Khondaker Golam Moazzem and Abrar Ahammed Bhuiyan revealed that the current policy landscape is proving increasingly inhospitable to foreign investors, particularly those from China, who have emerged as the largest contributors to foreign direct investment (FDI) in Bangladesh's renewable energy.

The CPD study highlighted a number of systemic challenges, including sluggish bureaucratic procedures, policy inconsistencies, unreliable digital services, and inadequate institutional support-all of which are deterring investment even before projects break ground.

A major blow to investor confidence, the researchers said, was the government's sudden cancellation of 31 solar power initiatives despite having issued Letters of Intent (LoIs).

The affected projects, totalling an estimated 3,300 megawatts and attracting prospective investments of around USD 6 billion, had already seen preliminary commitments of about USD 300 million from Chinese firms for land acquisition and groundwork. With these developments now stalled, investors face significant financial setbacks and a loss of trust in the country's investment reliability.

Representing the Chinese business community, Han Kun, President of the Chinese Enterprises Association in Bangladesh, voiced serious concerns about retroactive changes to power tariffs. He cited examples of operational plants-such as those in Patuakhali and Barishal-that received directives to alter the pricing structures agreed upon in signed contracts. "For investors, learning that key terms will be revised after construction is deeply unsettling," Han remarked. "Such unpredictability sends a strong deterrent signal to future financiers."

He further mentioned instances where payments were withheld or arbitrarily reduced-such as a USD 1.45 million deduction from a Chinese-funded project for an alleged delay in performance bond submission, despite no such penalty clause in the original agreement. In another case, over USD 200 million owed to the 1320 MW SSI plant remains unpaid.

CPD's analysis, which evaluated Bangladesh's investor facilitation framework against the United Nations Conference on Trade and Development (UNCTAD) Global Action Menu, pointed to multiple flaws across different tiers.

At the national level, abrupt rule changes and ineffective enforcement of bilateral treaties were cited. At the intermediate level, the report flagged non-transparent procurement procedures and land-related complications. On the ground, cumbersome documentation, inconsistent digital portals, and inadequate multilingual support-particularly in English and Chinese-were found to be hampering investor engagement.

Speakers at the forum also called attention to missed opportunities in sectors such as rooftop solar and merchant power generation. Despite the government's emphasis on expanding clean energy, limitations on rooftop capacity and the absence of a structured framework for merchant power projects are curbing investor interest.

Wang Weiquan of the Chinese Renewable Energy Industries Association attributed China's success in attracting renewable investment to policy consistency, fixed tariffs, and guaranteed off-take mechanisms. Bangladesh, he noted, lacks similar enabling conditions.

Md Shahidur Rahman, Bangladesh country head for Jinko Solar, emphasised that in many countries, governments help secure land for solar facilities-something Bangladesh has yet to do effectively. He also warned about the proliferation of low-quality, unauthorised solar panels entering the market, undermining industry standards.

SK Md Ruhul Amin, representing Chint Solar, questioned the rationale behind the cancelled LoIs, which the government claims were scrapped due to corruption. "We still haven't been informed where exactly the alleged irregularities occurred," he said. "We followed all formal steps, from land purchase to fund transfers, yet we're left without clarity or resolution."

Masudur Rahim, CEO of Omera Renewable Energy Ltd, highlighted gaps in the existing tender system-particularly the absence of implementation agreements, lack of payment security, and inconsistent tariff policies, which he said undermine confidence in long-term investment.

The CPD urged immediate reforms, including a centralised digital platform for all business processes, simplified and unified licensing procedures, and the removal of restrictive caps on rooftop installations. The think tank also recommended offering alternative projects or compensation to investors impacted by cancelled agreements, along with the creation of a formal grievance redress mechanism.

Dr Moazzem stressed the urgency of establishing a stable and transparent investment regime. "As global momentum for clean energy accelerates, Bangladesh must make itself a more predictable and investor-friendly destination-or risk falling behind in the race for sustainable development."

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