Bangladesh unveils renewable energy policy

DHAKA Thu Dec 4, 2008 1:33pm IST

DHAKA Dec 4 (Reuters) - Bangladesh's interim government has unveiled a renewable energy policy, the first of its kind, to ease the country's severe electricity shortages, and aims to achieve this by luring investors with a raft of incentives.

"The advisory council (cabinet) approved the policy aimed at exploring the country's electricity generating potential from renewable energy resources to meeting the nagging electricity crisis across the country," said M. Tamim, an aide to the head of interim government responsible for power and energy, said on Thursday.

Bangladesh at present faces up to 2,000 megawatts of electricity shortages which have forced hundreds of manufacturing firms across the country to shut down.

Tamim said the government aimed to generate about 10 percent of total electricity demand by 2020 from renewable sources, such as solar, wind, biomass and hydropower.

The government will target domestic and foreign investors with incentives, such as exemptions from corporate tax for 15 years, low-interest loans and a cap of 3 percent on import duty and value-added tax, he said.

Tamim said all investment will come from the private sector and the amount needed to achieve the 2020 target was about $1.5 billion.

Renewable energy producers will be allowed to use the state- owned grid to supply electricity but they will have to pay transmission charges to owners of the transmission facilities.

Renewable energy projects will also require a power generation licence from the Bangladesh Energy Regulatory Commission (BERC).

M. Fouzul Kabir, government power secretary told Reuters that several European firms showed interest in investing in the sector, though he declined to name the companies.

Industry observers were optimistic about prospects of the policy.

"As the government committed to impose a maximum 3 percent duty, it may be commercially viable for the projects," said Quamrul Ahsan, a professor from the electrical and electronic engineering department of Bangladesh University of Engineering and Technology.

He said current prices of wind turbine generators and solar cell were very high, but projects costs might be reduced with the lower duties. ($1= 68.80 taka) (Reporting by Serajul Islam Quadir; Editing by Ben Tan)

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