Renewable energy reforms cut tariffs, but transparency lags: CPD study

• Competitive bidding lowered tariffs by 24 percent
• Transparency concerns persist despite procurement reforms
• Systemic inefficiencies hinder renewable project approvals
• Investors demand guarantees to attract financing

Bangladesh's shift to competitive bidding for renewable energy projects has led to lower tariffs, but key challenges remain in transparency, accountability, and efficiency, according to a new study by the Centre for Policy Dialogue (CPD).

Unveiled yesterday at a national dialogue in Dhaka supported by the Australian High Commission, the study analysed 55 solar project tenders floated between December 2024 and March 2025 under the reinstated Public Procurement Act 2006 and the Public Procurement Rules.

The reinstated laws replaced the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, which allowed unsolicited contracts.

"Transparency has improved, but not enough," Khondaker Golam Moazzem, research director at CPD, said at the event. "Barriers for local firms, poor access to information, and low trust continue to hamper fair competition."

The study found that 41 percent of bidders reported leaks of sensitive data such as bid prices, while only 30 percent believed the evaluation process was largely transparent.

The study found that 41 percent of bidders reported leaks of sensitive data such as bid prices, while only 30 percent believed the evaluation process was largely transparent

Of 105 firms that purchased tender documents, only 44 submitted bids, and many large-scale projects above 100 MW received no bids due to strict financial requirements.

The average number of bids per package was just 1.4, raising questions about the effectiveness of competition.

On the positive side, the shift to open bidding resulted in a 24.6 percent drop in average tariffs, from $0.10 per unit to $0.08 per unit, highlighting the benefits of competitive procurement.

However, firms cited barriers such as unrealistic conditions, slow approval processes, complex land issues, and the absence of digital tendering.

Moazzem noted that while the Quick Enhancement Act initially addressed acute power shortages during the previous regime, it was eventually exploited by local and international interest groups.

He said the reintroduction of the Public Procurement Act and rules marks a positive shift but stressed persistent issues regarding efficiency, transparency, and private sector participation.

M Rezwan Khan, chairman of Power Grid Company Bangladesh PLC (PGCB), warned of systemic inefficiencies, noting, "We have nearly 28,000 MW of generation capacity, but demand is far lower. We're paying costly capacity charges due to uncoordinated expansion."

He also criticised the slow approval process – projects currently require up to 29 permissions – and flagged tariff losses due to delayed adjustments.

"The current tariff is based on a dollar rate of Tk 85, while the actual rate is Tk 122."

Muhammad Fouzul Kabir Khan, adviser to the Ministry of Power, Energy and Mineral Resources, joined virtually and explained that the absence of implementation agreements in new tenders reflects a conscious shift towards direct procurement.

"This is not project finance; it's service procurement," he said, adding that reliance on competitive tariffs provides a stronger financial safeguard than legacy legal guarantees. "Government liabilities from past IAs reached $3.2 billion. We're moving away from that."

He stressed that competitive bidding would ensure affordability. "If tariffs are reasonable, utilities can pay. But no utility can absorb Tk 21 per unit."

Clinton Pobke, deputy head of mission at the Australian High Commission, praised the repeal of the 2010 Special Act as a vital step.

Noting Australia's ongoing support through think-tank collaboration, policy development with the World Bank and IFC, and private sector engagement, he also said, "Evidence-based policies can lead to higher growth, more jobs, and better environmental outcomes."

David Hasanat, president of the Bangladesh Independent Power Producers' Association, called for a more realistic, business-friendly procurement approach.

"You can draft perfect policies, but without proper implementation, they'll fail like a banker with no returns," he said, noting that policy comparisons with countries like Saudi Arabia overlook differences in solar radiation and efficiency.

"Unlike India, where non-farming land acquisition is streamlined, we face legal and bureaucratic delays," he added.

Han Kun, president of the Chinese Enterprises Association in Bangladesh, stressed the importance of enabling policies, particularly sovereign guarantees, to attract foreign investment.

"In the last 10 years, Chinese investors accounted for 55 percent of 8,000 MW in private power additions. Yet Bangladesh's renewable share remains below 3 percent—far behind Vietnam (6.3 percent) and Cambodia (61 percent)," he said.

Kun warned that without guarantees against currency fluctuations, payment delays, and repatriation risks, investors would remain hesitant. "Government-backed guarantees are crucial to build trust and secure competitive financing in the renewable energy sector," he added.