Market update · Global
Bangladesh Seeks to Lower Tariffs on Delayed Solar Projects Amid Investor Concerns
The Bangladesh government is renegotiating power purchase agreements (PPAs) for solar projects that were approved years ago but remain unbuilt, aiming to reduce tariffs set when costs were higher. This move has raised concerns among investors about increased contract risk and market confidence.
SolTraCo market update · · 3 min readGovernment Initiative to Lower Solar Tariffs
Bangladesh is actively renegotiating PPAs with solar developers who signed agreements years ago at high tariffs but have yet to complete their projects. A government committee formed in April has engaged with several project owners and plans further meetings to align tariffs with current lower construction and equipment costs.
These projects were initially approved under the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010, mostly based on unsolicited proposals. Despite repeated extensions, many projects remain incomplete, prompting the government to revisit contracts and tariff structures.
Investor Concerns Over Contractual Risks
Private investors and project owners acknowledge the government's concerns regarding delayed projects but emphasize that contractual milestones and remedies should govern project performance rather than tariff renegotiations. They argue that tariffs are fundamental to financial models, debt arrangements, and investment decisions.
Investors warn that revisiting agreed tariffs post-signing introduces additional contractual and regulatory risks, potentially undermining market confidence. They advocate for transparent, project-specific reviews based on existing agreements, especially for long-delayed or non-performing projects.
Industry Perspectives on Tariff Renegotiation
Mostafa Al Mahmud, president of the Bangladesh Sustainable and Renewable Energy Association, supports tariff renegotiation only for projects that have failed to progress. He opposes tariff changes for projects already at advanced construction stages, warning that such measures could diminish investor confidence necessary for Bangladesh's renewable energy goals.
Sources
This update is an original SolTraCo synthesis of the linked industry sources. Reported facts and commercial interpretation are kept separate. It does not contain confidential deal information and is not investment, legal or technical advice.