Govt revisits 31 cancelled renewable projects to boost power supply
For full implementation, foreign direct investment worth about $4.5 billion is in the pipeline, with funding expected from China, France, Malaysia, Singapore, South Korea, Germany, Japan, the United States, the United Arab Emirates and Saudi Arabia
The government has decided to assess whether 31 renewable energy projects, cancelled by the interim government while under implementation, can be allowed to continue in a bid to increase electricity generation.
On 6 May, the Ministry of Power, Energy and Mineral Resources issued an office order forming a committee to examine whether activities under the cancelled letters of intent (LoIs) could legally proceed.
The committee is headed by Bangladesh Power Development Board (BPDB) Chairman Rezaul Karim, while Power Division Joint Secretary Md Mahafuzar Rahman serves as a member.
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The ministry has asked the committee to review the ongoing projects in line with existing laws and submit a report within seven working days.
Committee head Rezaul Karim told TBS that work has already begun. "The report will be submitted to the ministry on time. We will examine the cancelled projects based on legal provisions and practical realities."
According to ministry sources and stakeholders, the 31 companies began operations and made significant progress after receiving LOIs during 2022-2023 under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010.
However, in 2024, the interim government cancelled the LoIs of these 31 companies, allegedly misinterpreting a High Court verdict in the process.
Khondaker Golam Moazzem, research director at the CPD, told TBS that the government has scope to renegotiate with these companies.
He said that if any irregularities were committed in signing contracts, action could be taken against those responsible, but cancelling all agreements outright was not appropriate.
He added that if the High Court ruling had been fully and properly considered, the issue could have been resolved in a more "amicable manner".
According to him, the court's judgment also stated that the BPDB could renegotiate the agreements if necessary. "Instead of taking that route, cancelling everything unilaterally does not appear to be a well-considered decision."
Substantial progress was made
According to investor sources, nearly 90% of the financing for these projects came from foreign companies. The projects were expected to generate 3,287MW of electricity, with potential foreign investment worth around $6 billion.
They said substantial progress had already been made after receiving the LOIs, including the acquisition of large areas of land. However, the interim government's decision to cancel the LoIs created uncertainty among both local and foreign investors.
Some foreign investors had also planned to withdraw following the cancellation. The current government's move to reassess the projects has renewed optimism among investors in the renewable energy sector.
According to investors, more than 15 project sponsors had already completed 100% land acquisition after receiving initial approval for implementation. The projects include 2,942MW of solar power, 320MW of wind power and 25MW of waste-to-energy capacity.
They added that private-sector investors have already spent around $200 million, channelled through foreign lenders and banking systems, to advance project development.
For full implementation, foreign direct investment (FDI) worth about $4.5 billion is in the pipeline, with funding expected from China, France, Malaysia, Singapore, South Korea, Germany, Japan, the United States, the United Arab Emirates and Saudi Arabia.
'LOIs cancelled without consulting court or investors'
Sakir Ahmed, power sector expert and additional managing director at Citymead Group, said the current government's decision to review the cancellations deserves appreciation.
He said the unilateral cancellation of 31 LOIs by the interim government had created complications, effectively stalling the renewable energy sector.
He added that the High Court, in its verdict on a writ petition, issued clear directions: "The court ordered that contracts and initiatives taken under the law should be implemented, with provisions for review if necessary, and legal action in case of any wrongdoing."
However, Sakir said the previous government cancelled all LoIs without consulting the court or investors, creating uncertainty in the sector.
The energy expert expressed hope that the committee formed by the current government would help restore confidence in the sector, at least partially.
Court verdict and interim's actions
The companies began operations after receiving LOIs between 2022 and 2023 under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010.
Following a writ petition, the High Court on 14 November 2024 struck down two provisions of the Act, including one allowing the energy minister to directly negotiate power purchase agreements without competitive bidding, and another granting indemnity for such contracts.
While scrapping these provisions, the court observed that projects already approved and operating under the Act would be "provisionally condoned", meaning actions taken in good faith by the authorities under the law would remain valid.
However, on 18 November 2024, just days before the full verdict was published following the brief High Court ruling, the BPDB issued letters to the 31 companies.
The letters stated that, following the annulment of the two provisions, the government would no longer proceed with power purchase agreements under the existing framework. It also stated that future procurement would be considered under the bidding process.
Subsequently, the interim government moved ahead with new tenders for renewable energy projects, bypassing the earlier companies. However, stakeholders said these initiatives have not yet produced significant results.
Company law expert Ahsanul Karim told TBS that although the High Court struck down two provisions of the special law, the full judgment clearly stated that contracts already completed and projects in operation were granted "provisional condonation".
The legal expert said the interim government issued notices reviewing ongoing foreign-funded projects before the full judgment was published and without properly considering the court's ruling, which he argued was not in line with legal procedure.
