Powering Bangladesh: Redirecting LNG Investments towards Renewable Energy
At a roundtable titled “Redirecting Finance from LNG to Renewable Energy in Bangladesh,” experts warned that the country’s clean energy transition is stalled not by technology or lack of interest, but by weak governance and policy inconsistencies
Kazi Morshed Alam
Head of Programme & Engagement
At a roundtable titled "Redirecting Finance from LNG to Renewable Energy in Bangladesh," experts warned that the country's clean energy transition is stalled not by technology or lack of interest, but by weak governance and policy inconsistencies.
The event, organised by ActionAid Bangladesh on 10 December at a city hotel, featured strategic partner The Business Standard and research partner Change Initiative.
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Moderated by ActionAid's Kazi Morshed Alam, the discussion focused on how rising LNG financing – characterised by volatile import prices and massive capacity payments – is draining national resources.
Research from Change Initiative highlighted that this heavy fossil fuel dependency creates significant financial stress, including substantial foreign exchange losses. Speakers urged a strategic pivot towards renewable energy to secure economic resilience and long-term energy sovereignty.
Abul Kalam Azad
Manager, Just Energy Transition, ActionAid Bangladesh
Bangladesh stands at a critical energy crossroads. Yet the energy sector remains overwhelmingly dependent on fossil fuels and imports. Recent global LNG price shocks have laid bare this vulnerability – energy security cannot be guaranteed through imported fuels alone.
Although national policies target 20% renewable energy by 2030, renewables still account for less than 3% of electricity generation, leaving Bangladesh behind its regional peers.
The pressing challenge is how to redirect existing LNG investments toward clean, renewable alternatives. Bangladesh's realities – high population density, deltaic geography, and land constraints – demand innovative, locally tailored solutions.
M Zakir Hossain Khan
Chief Executive, Change Initiative
When Bangladesh signed the Paris Agreement in 2015, there was no room for new LNG or coal if the world was serious about limiting warming to 1.5°C. Yet years later, fossil fuel investments persist as the climate crisis deepens.
From 2018 to 2025, Bangladesh spent nearly $18 billion on LNG – funds that could have delivered around 22,000MW of renewable capacity.
The constraint is not financing, but political intent. Even a modest global carbon tax could mobilise trillions for climate action.
Within its first 100 days, the next government must enable 5,000 MW of privately financed solar power, laying the foundation for a transparent, resilient, and sustainable energy future.
Nuria Lopez
Chairperson, European Union Chamber of Commerce in Bangladesh (EuroCham)
From an investor's perspective, Bangladesh must urgently accelerate its transition to renewable energy – specifically solar and wind – to offset its lack of domestic fuel resources. For export-driven sectors like ready-made garment (RMG), aligning with EU sustainability and carbon compliance standards is no longer optional; it is essential for maintaining market access.
However, a significant gap in energy planning persists. Bangladesh requires a transparent, credible roadmap to attract foreign direct investment and ensure reliable industrial power. While substantial EU funding for renewables exists, it remains underutilised due to fragmented regulations and policy uncertainty.
SM Bayzid
Adviser, Norwegian Embassy
As an adviser at the Norwegian Embassy, I reaffirm our commitment to Bangladesh's renewable energy transition. Our current focus is establishing a credible merchant Power purchase Agreement (PPA) framework to meet the urgent corporate demand for clean energy from leaders like Grameenphone.
However, the investment landscape remains challenging. Over 14 years, we have seen major Norwegian solar firms exit after years of effort due to policy complexity, land hurdles, and institutional inertia. In one case, an eight-year project was cancelled post-LOI, leading to an $8 million loss.
In total, over $15 million has been lost, and many investors now view the current tendering process as unbankable. To restore confidence and secure long-term capital, Bangladesh must streamline its regulatory environment and adopt workable power structures.
Shah Abdul Saadi
Deputy Secretary, Economic Relations Division (ERD)
Despite ambitious renewable energy targets – 15% by 2025 and 40% by 2041 – continued investment in fossil fuels like LNG persists. His solution centres on systems integration: aligning actors, technologies, and institutions to ensure total policy coherence.
To succeed, investment incentives must attract both new and existing stakeholders. Renewable energy deployment must be executed carefully to maintain grid stability while integrating seamlessly with legacy fossil fuel systems. Practical institutional frameworks, such as independent power producers (IPPs) and solar irrigation projects, demonstrate how real-world practice should inform future policy.
Nazmul Hoque
Chief Investment Officer, Investment Development Company Limited (IDCOL)
Having financed nearly half of Bangladesh's renewable and fossil fuel capacity over 25 years, I view our energy crisis through a lens of practical complexity. Stakeholders hold competing priorities: activists demand 100% renewables, citizens focus on costs, and the government must balance security with subsidies.
Realistically, fossil fuels like LNG remain indispensable in the near term. Even achieving 20% renewables by 2030 leaves 80% of our energy dependent on imports. Therefore, our immediate priority must be energy conservation and efficiency. High-impact, "low-hanging fruit" – such as improving appliance standards – can drastically reduce consumption without massive capital.
Financially, mobilising the required billions annually via development banks is feasible if we empower institutions like SREDA to lead.
Md Delowar Hossain
Joint Director, Sustainable Finance Unit, Bangladesh Bank
While many discussions repeat familiar challenges, finding the optimum approach for Bangladesh is essential. Given the reality of land scarcity, rooftop solar remains our primary focus. However, rooftops alone cannot meet total demand, necessitating limited land-based solar.
We have identified strategic alternatives, including unused railway land, highway corridors, and specific single-crop areas, despite ongoing challenges regarding certification and agricultural preservation.
Our strategy avoids direct intervention; instead, we provide robust policy support and leverage financial institutions to drive growth. To mitigate credit risk, we are establishing concessional funds to facilitate affordable lending.
Zahidul Alam
Senior Vice President, BSREA
As senior vice president of BSREA, I highlight that renewable energy accounts for only 5.38% of Bangladesh's installed capacity – surpassing the 5% milestone a decade behind schedule. While regional peers like India (51%) and Pakistan (46%) lead the transition, we struggle with a significant gap.
A major setback was the sudden cancellation of 37 solar IPP projects (3,000 MW), which stalled momentum. Furthermore, rigid pricing caps and policy reversals have shaken investor confidence, making many projects unviable.
To build a credible roadmap, Bangladesh must prioritise policy continuity, realistic targets, and inclusive stakeholder dialogue to restore trust and accelerate the transition.
The roundtable was also addressed by Aziza Sultana Mukti, deputy CEO, Solshare, Badrul Imam, academician, University of Dhaka, Abdus Sabur, local fisherman, Moheshkhali, Cox's Bazar, Mir Md Ahsan Huda, representative, LONGi.
Md Ruhul Amin
Deputy General Manager (LNG), Petrobangla
The central issue facing our energy sector is pricing; current electricity rates simply do not align with the realities of our gas supply. While demand remains high, our inability to meet it has forced an increasing and costly reliance on imported LNG.
This dependency is exacerbated by the sharp decline in domestic gas production. By 2029, output from local fields will drop significantly. For instance, the Bibiyana field, which currently produces approximately 1,500 MMCFD, is projected to plummet to just 500-600 MMCFD within the next few years.
To bridge this widening gap, exploring alternative solutions is no longer optional.
Shafiqul Alam
Lead Energy Analyst (Bangladesh), Institute for Energy Economics and Financial Analysis
Energy efficiency is non-negotiable for Bangladesh. Currently, the power sector is 65% import-dependent, a systemic vulnerability caused by years of relying on "quick fixes" rather than strategic planning.
We need a comprehensive transition across the entire energy system, not just electricity. In 2023-24, 56% of our 58 million tonnes of oil equivalent was imported. Over-reliance on LNG has spiked industrial and captive generator prices by 260-270%, adding billions in costs.
Nure Alam
COO-Renewable Energy, RMIL, RFL Group
PRAN-RFL is currently developing a 100MW AC solar plant on our own land in partnership with H&M to support RMG suppliers. While the policy intent for renewable energy is strong, operationalising it faces significant hurdles. A major concern is the proposal to increase the Open Access Tariff for private developers from 29 paisa to 1 taka per unit. This added cost threatens to make renewable projects non-competitive, especially when measured against subsidized tariffs.
To ensure national energy security, we need policies that guarantee bankability and viability, allowing private businesses to invest with confidence. The intent is correct, but execution must now follow.
Naznin Akhter
Director (Business), Solaric
In the previous regime, we avoided Independent Power Producer (IPP) projects, focusing instead on rooftop solar and successfully installing 140MW. While we welcomed the new regime's transparent open tender process, the execution remains concerning.
Out of 55 applicants, only 12 projects were awarded. My 45MW Mymensingh project, with a competitive bid of 8.8 cents, remains in limbo, raising questions about the selection criteria for realistic pricing.
Furthermore, the proposal to triple wheeling charges for Merchant Power Plants – from 30 paisa to 1 taka – threatens project viability.
KEY TAKEAWAYS
Shift Away from LNG towards Renewables: Urgently redirect investment from imported LNG and fossil fuels to solar and wind, Biogas etc. Cancel or review fossil fuel contracts and stop long-term LNG expansion. Declare clear phase-out plans (e.g., rapid solar scale-up targets).
Create Strong, Transparent Financing & Investment Frameworks: Establish dedicated renewable energy funds, green bonds, and just transition funds. Re-channel international (especially Nordic/EU) finance from LNG to renewables. Simplify bureaucracy, ensure policy operationalisation, and de-risk private and SME investments. Extend loan tenors to 15+ years, introduce credit guarantee schemes, and use concessional climate funds to reduce interest rates.
Ensure a Just, Context-Specific Energy Transition: Design policies tailored to Bangladesh's local context (land scarcity, communities, livelihoods). Protect affected communities and workers through reskilling, compensation, and community ownership. Align energy transition with economic growth, export competitiveness, and social equity.
Develop a Clear Energy & Gas Supply Roadmap (by 2029): Prepare a national roadmap to address the impending gas supply drop-off expected by 2029. Align pricing, renewables expansion, and demand management to avoid future energy shocks.
Scale Up Solar Energy with Quality, Land, and Local Capacity Focus: Prioritise rooftop solar and innovative land use (railways, highways, agri-voltaics). Ensure quality control in solar installations and build local EPC and maintenance capacity to avoid long-term performance and carbon-locking risks.
Strengthen renewable energy policy: Ensure bankable power purchase agreements (PPAs), transparent tariff-setting mechanisms, and guaranteed grid access to get supported by fast-track permitting and fiscal incentives to reduce investor risk.
All participants at the roundtable
Dr. Shah Abdul Saadi, Economic Relations Division (ERD); Engr. Md. Nasir Uddin Miah, DESCO; Md. Salahuddin, Petrobangla; Md Ruhul Amin, Petrobangla; Nazmul Haque, Infrastructure Development Company Limited (IDCOL); Md. Delowar Hossain, Joint Director, Sustainable, Finance Dept. ; Nuria Lopez, European Union Chamber of Commerce in Bangladesh; Zahidul Alam, BSREA; Nure Alam, RMIL, RFL Group; Mohammad Mahbubul Hasan, IB Vogt (BD) Ltd. ; Mir Md. Ahsan Huda LONGi; Naznin Akther, Solaric; Aziza Sultana Mukti, Solshare; Kaniz Fatema Koyel, Solshare; Abu Hena Mostofa Kamal, Direct Renewable Energy Pte. Ltd. ; S. M. Raihan, Joules Power Limited; S M Gofranul Hoque, ABG Interlinks Ltd. ; TAIF Hossain, Delegation of the European Union to Bangladesh; SM Bayzid, Norwegian Embassy; Md Sharifuzzaman, City Bank PLC; Syed Murtaza Jahangir, SNV Bangladesh; Cynan Houghton, Tara Climate Foundation; Sajib Sen, Tara Climate Foundation; M. Zakir Hossain Khan, Change Initiative; Abul Kalam Azad, Action Aid Bangladesh; M Mofazzal Hossain, Change Initiative; Kazi Morshed Alam, Action Aid Bangladesh; Hussna Jalal Ruthila, Action Aid Bangladesh; Dr Badrul Imam, University of Dhaka; Abil Bin Amin, Ethical Trading Initiative Bangladesh; Salma Akter, Waste Bangladesh; Anwar Hossain, Islamic Relief Bangladesh; Sarmin Brishty, NGO Forum on ADB; Iftekharul Islam, SANEM; Silvi Razzaque, GLOBAL CENTER ON; Shafiqul Alam, IEEFA; DR. Muhammad Badrul Hasan, University of Dhaka; Mahdi Al Wakil, YOUNGO (UNFCCC); Nusrat Jahan Tanima, University of Dhaka; Nuzhat Tarannum; Mostafa Kamal Mojumder, Environment Jourlist Forum; Shamim Jahangir, Forum of Energy Journalism; Shahnaz Bagum, Forum of Energy Journalism; Mollah Amzad Hossain, Energy & Power; Sirajul Mustafa Rubel, Moheskhali, Cox Bazar; Abdur Sabur, Moheskhali, Cox Bazar; Hossain, Community Representative; Goljar, Community Representative.
