In addition to 10 projects, the Energy Division is now planning to set up many more solar power plants, after receiving the notification from the BNR regarding the restoration of tax exemption on these private investments.

Power division officials said it is now certain that the number of solar projects will increase from the existing 10 proposed plants.

Earlier, the Power Division had planned to install 10 solar power plants in the private sector and sought approval from the Ministry of Finance for the National Board of Revenue (NBR) to restore tax exemption on private investments.

Each of the proposed plants was supposed to have a power of 50 MW for a total capacity of 500 MW.

“Finally, we have received the notification from the NBR in this regard and now the number of solar power plants will exceed 10,” said energy and power advisor to the caretaker government, Dr Muhammad Fouzul Kabir Khan.

However, the total number of proposed plants has not yet been determined, he told UNB.

Power division officials said the number of solar plants could be between 30 and 40.

As per the NBR circular issued on October 27, private investors in renewable energy will benefit from a 10-year tax exemption on their investments.

The circular states that companies that will begin commercial operation of their renewable energy-based power generation project on the basis of construction, ownership and operation under the power generation policy electricity from the private sector of Bangladesh during a period between July 1, 2025 and June 30, 2035. will benefit from a tax holiday for 10 years.

“These companies will benefit from a tax exemption of 100% for the first 5 years, 50% for the next 3 years and 25% for the remaining 2 years,” the BNR notification said.

The tax incentive to grant these benefits over a period of ten years was designed to support the long-term growth and development of renewable energy projects, the circular added.

Previously, the government withdrew these exemptions through a Gazette Notice published on June 26, 2023, stating that businesses that reach their commercial operating date (COD) between January 1, 2023 and June 30, 2024 will benefit tax exemptions.

According to the terms of the previous Official Journal, private electricity production companies – excluding coal-fired power plants – are eligible for various tax exemptions.

As noted in the previous NBR notification, private power generation companies will enjoy 100% income tax exemption until June 30, 2036, limited to income from power generation activities.

Additionally, foreign personnel employed by these companies will be exempt from income tax for three years after their arrival in Bangladesh.

Other exemptions include 100% income tax relief for the first five years of operation from COD, 50% exemption for the next three years and 25% exemption for the next two years indicates the previous notification.

Sources report that the caretaker government, after taking office, suspended the Rapid Increase in Electricity and Power Supply (Special Provision) Act, 2010 and canceled 34 solar power projects that had been approved under this Act.

These projects were initially selected without competitive bidding and on an unsolicited basis.

Instead, the Power Division chose to open a tender for the establishment of 10 solar power projects, with a total capacity of 500 MW, with each project offering 50 MW.

However, many potential investors have expressed reluctance to participate in the tender without receiving tax exemption benefits.

As a result, the state-owned Bangladesh Power Development Board (BPDB) was unable to float the tender for the projects.

Following this, the Power Division requested the reactivation of tax exemption benefits, by sending a letter to the BNR.

A senior BPDB official said that after the tax holiday was reinstated, they now expect more investors to come and participate in bidding for private solar power projects.

“In fact, there are a number of proposals: the total number of solar projects could reach 40, with an average capacity of 50 each,” he said.

“But, from capacity to locations, everything related to the new solar power project will be finalized this week in a high-level meeting,” he said.

The clean energy transition in Bangladesh

Bangladesh has set ambitious targets to meet 40% of its energy needs through renewable sources by 2041. Achieving this will require an investment estimated between $1.5 billion and $1.71 billion, according to the Center for Political Dialogue (CPD).

In line with its commitment to low-carbon development, Bangladesh is increasingly focusing on renewable energy and energy efficiency.

According to the Sustainable and Renewable Energy Development Authority (SREDA), Bangladesh currently produces 1,374.35 MW from renewable sources, including 230 MW from hydropower and 1,080.36 MW from solar energy.

According to a Power Cell document, projects totaling 3,963.5 MW are at different stages of implementation. Specifically, 943.5 MW of projects are under construction, 609 MW have received letters of intent (LOI) or notifications of award (NOA), 228 MW are under tender and 2,183 MW remain in the planning phase.