Legal Guidelines for Foreign Investment and Market Access in Bangladesh

2025-11-25

Introduction:

Bangladesh possesses abundant renewable resources, including solar, wind and biomass energy. The nation has optimized its business environment through measures such as streamlining approvals, eliminating import duties on key equipment and implementing green power trading schemes to attract global investment. This guide systematically outlines Bangladesh’s legal framework, rights and licensing regime, import-export regulations, financing incentives and dispute resolution pathways, providing investors with compliance guidance and helping them capitalize on regional green transition opportunities.

ONE.Legal Framework and Industry Overview

（One）Primary Renewable Resources and Their Distribution^[1]

1.What are the primary renewable energy sources in the region?

(a) Solar Power: Average annual solar radiation ranging from 4.5 to 5.8 kWh/m²/day, with the highest levels in the northwest.

(b) Wind Power: Onshore wind (average wind speed 6-7 m/s, optimal in coastal areas and Chittagong Hill Tracts) and offshore wind (wind speeds exceeding 8 m/s off Cox’s Bazar).

(d) Small Hydropower: Potential exists at 60 sites in Sylhet and the Chittagong Hill Tracts, with a combined installed capacity of approximately 1.2 GW.

2.What are the currently identified key blocks?

(a) Solar power: High-irradiance zones in Khulna, Bogura, Rajshahi, and Dinajpur.

(b) Wind power: Chittagong-Bandarban ridge, Khulna coastal area, and St. Martin's Island-Teknaf offshore.

(d) Small Hydropower: Sylhet Biyangchilar River and Rangamati Kaptai River Basin.

The above projects require tiered licensing: All projects must register with the Sustainable and Renewable Energy Development Authority (SREDA) for inclusion in the national database. Projects exceeding 5 MW must additionally apply for a generation license from the regulatory institution Bangladesh Energy Regulatory Commission (BERC) and undergo strict oversight.

（Two）Recent Legislative and Regulatory Developments

Bangladesh is steadily expanding its renewable energy sector by prioritizing solar resource development and advancing wind power projects. The government is standardizing approval procedures for renewable energy projects, launching large-scale solar and wind farm construction nationwide, and revising the Renewable Energy Policy to attract investment and enhance industry transparency. These initiatives form a crucial component of the national energy transition and green development strategy.

（Three）Renewable Energy Legal Framework and Enforcement Agencies^[2]

1.What are the primary legal documents for the renewable energy sector? What policies are in effect in the renewable energy power generation field?^[3]

In June 2025, the Bangladesh government formally enacted the new Renewable Energy Policy 2025, replacing the previous policy that had been in effect for 17 years. This new policy serves as the core legal document regulating the country’s renewable energy activities. This policy establishes a mandatory target of sourcing 20% of the nation’s electricity from renewable energy by 2030. It introduces for the first time a peer-to-peer (P2P) green power trading mechanism, Renewable Purchase Obligation (RPO), and a Renewable Energy Certificate (REC) trading system, establishing a comprehensive institutional framework covering project development, grid connection, trading, and regulation.

The policy explicitly includes 13 technologies—such as solar, wind, and biomass—within the scope of national support. It permits private entities to develop small, micro, nano, and pico-grids based on competitive markets and, for the first time, grants residential and industrial users the right to sell electricity back to the grid. To lower investment barriers, the government simultaneously eliminated import tariffs on solar inverters and plans to establish a national quality control and research laboratory. This will implement mandatory certification for renewable energy equipment to ensure system safety and long-term operational efficiency.

2.Enforcement Agencies

First, the Ministry of Power, Energy, and Mineral Resources (MPEMR) serves as the core policy-making and regulatory body. It is responsible for formulating renewable energy development strategies, approving large-scale wind and solar projects, issuing power generation licenses, and leading investment agreement negotiations between the state and developers. Such agreements must be filed with the Cabinet Economic Committee when exceeding specified installed capacity thresholds or involving foreign capital.

Second, the SREDA under MPEMR handles daily industry oversight. This includes processing project approvals, approving electricity tariffs, supervising REC trading, implementing net metering and peer-to-peer green electricity trade registration, and collecting quarterly operational data and environmental impact reports.

Third, the New Energy Equipment Quality Assessment and Certification Center is responsible for quality inspection, laboratory certification, and traceability label management of key equipment such as photovoltaic modules, wind turbines, and energy storage systems. It combats counterfeit and substandard products and coordinates international mutual recognition procedures to ensure imported and locally manufactured equipment meets national safety and performance standards.

（Four）Government Equity Participation and Mandatory State Involvement

Under Bangladesh’s renewable energy regulations, there are no mandatory requirements for non-compensated government equity and mandatory state participation. According to the Renewable Energy Policy 2025 and its supporting regulations, both domestic and foreign wholly-owned projects may hold 100% equity. The state may acquire an equity interest only under the following two circumstances, both based on commercial terms:

1. Land equity contribution: Projects utilizing state-owned wastelands, sandbanks, or water bodies directly allocated by the government must contribute equity based on appraised land value. The proportion is negotiated between parties, typically not exceeding 5%, and may be diluted proportionally with subsequent private financing.

2. Strategic Supporting Investment: For projects included in the national Mega Renewable Energy Parks (≥500 MW) and benefiting from sovereign-guaranteed financing, the Ministry of Power, Energy, and Mineral Resources may exercise additional investment rights through state-owned power companies (BPDB or PGCB). The equity ratio is contingent upon the cash contribution being fully paid up, and it also follows the principles of equal rights for equal shares and proportional dilution.

TWO.Licenses and Rights^[4]

A. Primary Categories of Rights and Interests

In Bangladesh, the following types of Renewable Energy Development Rights are available for renewable energy exploration, production, and processing:

1. Resource Assessment Letter: Authorizes the holder to conduct preliminary surveys and data collection for solar, wind, or biomass resources within a designated area. It is valid for 12 months, renewable once.

2. Preliminary Project Endorsement: Similar to an "exploration permit," this authorization permits detailed feasibility studies, Environmental and Social Impact Assessments (ESIA), and land surveys upon approval. It is valid for 18 months.

3. Renewable Energy Producer Registration: Issued by SREDA after project commissioning, this is essential for participating in REC trading and receiving green premium electricity rates.

4. Holding-Carrying-Processing Permit: Applicable only to raw materials requiring on-site storage and transportation, such as biomass and biogas. Authorizes holders to temporarily store, transport within the site, and perform primary processing of renewable raw materials like agroforestry residues and biogas to ensure fuel supply chain compliance.

B.Application Procedures, Validity Period, Renewal, and Core Obligations

Bangladesh's renewable energy activities are governed by a structured legal framework primarily established under the Renewable Energy Policy 2025 and the Renewable Energy Development Regulations. This system implements a progressive Renewable Energy Development Rights regime corresponding to three main project development stages. Each stage requires specific entitlement documents, including: Resource Assessment Letter, Preliminary Project Endorsement, Renewable Energy Producer Registration, and Holding-Carrying-Processing License. These documents grant holders "renewable resource development rights" distinct from land ownership, though such rights cannot be pledged independently.

1.Resource Assessment Letter

Issued by the Ministry of Power, Energy, and Mineral Resources (MPEMR) or its authorized agency, this letter authorizes the holder to conduct non-invasive preliminary activities within a designated area. These activities include solar radiation measurements, wind speed logging, biomass resource surveys, or hydrological data collection. The letter is non-exclusive, allowing multiple holders to operate concurrently within the same area. It is valid for one year, renewable only once, and non-transferable or leaseable. Upon achieving positive results, the holder gains priority rights to apply for a Preliminary Project Endorsement. It also permits the transport of small sample quantities for testing purposes, subject to category-specific reporting to SREDA or prior authorization for cross-border transport.

2.Preliminary Project Endorsement (PPE)

The PPE constitutes an exclusive right that may be recorded as a corporate intangible asset and is transferable or assignable upon written approval from MPEMR. Issued by MPEMR upon approval by the Ministerial Joint Meeting, it carries an initial term of three years and is renewable twice, with each renewal extending for two years. Holders must initiate substantive feasibility studies within nine months of issuance; failure to do so entitles SREDA to revoke the endorsement without compensation. Upon confirming commercial viability through the feasibility study, the holder receives priority rights to apply for a generation license. During the endorsement period, limited quantities of renewable resources may be extracted for laboratory analysis, provided that batch-wise reporting requirements are met.

3.Renewable Energy Producer Registration (REPR)

Applicable to power plants that have completed construction and passed grid connection acceptance. Applicants must submit a completion report, performance test data, environmental compliance letter, and operation and maintenance plan. The registration certificate is valid for 30 years, synchronized with the power generation license, and may be extended multiple times, each extension for 15 years. Only after obtaining this certificate can participants engage in REC trading, receive green premium electricity rates, and enjoy tax deductions in accordance with the law.

4.Holding-Carrying-Processing Permit for Biomass Feedstock

For investors requiring on-site storage and transportation of renewable resources such as agricultural/forestry waste and biogas feedstock. The permit is valid for one year with unlimited renewals; renewal applications must be submitted 30 days prior to expiration. SREDA may revoke the permit immediately for violations of safety, sanitation, environmental, or payment obligations. Investors may only sell collected materials to power plants holding valid REPR Certificates or approved biomass fuel processing plants. Quarterly inventory ledgers must be submitted to SREDA, subject to random inspections and traceability audits.

Through this Renewable Energy Development Rights system, Bangladesh ensures that all stages of renewable energy development operate within a transparent, predictable, and fully regulated environment.

THREE.Export and Value-Added

A. Circulation and Export Restrictions on PV Modules and Wind Turbine Blades in Bangladesh's New Energy Sector

1.Processing and Conversion of Photovoltaic Modules and Wind Turbine Blades

Before reprocessing photovoltaic modules or wind turbine blades domestically, manufacturers must submit a "Key Component Remanufacturing Notification" to SREDA, accompanied by a power curve or structural integrity report issued by a third-party laboratory. Any process involving silicon material remelting or resin-based composite pyrolysis also requires a hazardous operations permit from the Ministry of Environment, Forest and Climate Change.

2.Export of Finished or Semi-finished Products

Only high-efficiency photovoltaic modules with an efficiency ≥20.5% and National Photovoltaic Laboratory (NPVL) certification are permitted for export. Exporters must upload module serial numbers, NPVL QR codes, and traceability records to the customs electronic system, ensuring one-to-one correspondence with local project registration numbers to prevent the export of "old modules masquerading as new."

For wind turbine blades with a length ≥50 m, a 'Retired Blade Re-export' application must be submitted..." to the Ministry of Energy and Mineral Resources prior to departure, stating domestic lack of reuse or refurbishment capacity. Customs clearance is exclusively handled at Chittagong's "Wind Power Oversized Cargo Terminal," where on-site verification confirms consistency between blade root numbers, Radio Frequency Identification (RFID) chips, and SREDA decommissioning codes.

Oversized blades or full container loads of components require a "New Energy Oversized Cargo Permit" for domestic road transport. Transport logs must document bridge load capacities, turning radii, and escort vehicle details, with real-time transmission to the central traffic monitoring platform to ensure road network safety and component traceability.

This system ensures traceability, transparency, and effective oversight for photovoltaic modules and wind turbine blades during domestic circulation and export.

B.Local Processing and Value-Added Incentives

Bangladesh has not currently established specific tax incentives for ‘local processing’, but has introduced regulatory value-added requirements for photovoltaic modules, wind turbine blades and green hydrogen derivatives, thereby creating incentives: For PV module and wind turbine blade remanufacturing plants certified by national-level testing lines, the proportion of existing area that can be retained during project expansion and renewal is increased from 50% to 70%; Constructing electrolytic hydrogen production or synthetic ammonia facilities within the same industrial park and connecting them to online carbon intensity monitoring systems qualifies for exemption of 30% of the required additional firewall area. Establishing end-of-life component sorting centers in Chittagong or Mongla ports and obtaining SREDA permits allows dismantled materials to be exported under the "recycled materials" fast-track customs clearance procedure, halving clearance time. In other words, this system encourages enterprises to complete value-added processing of photovoltaic, wind power, and hydrogen derivatives within Bangladesh by reducing land, safety, and logistics costs.

FOUR.Due Diligence and Transfer

（One） How is legal due diligence for Renewable Energy Development Rights conducted? What key considerations should investors note?

Official registries for "Renewable Energy Development Rights" such as solar power generation, wind power, and biomass energy are maintained exclusively by SREDA and local offices of the Ministry of Energy and Mineral Resources, with daily updates. Consequently, investors cannot conduct online due diligence. They must either personally verify original documents or authorize local attorneys to do so on-site, and obtain the "Extract of Legal Status of Renewable Energy Development Rights" bearing a cross-seal stamp to secure legally valid, complete information.

（Two）Are the Renewable Energy Development Rights transferable?

Except for resource exploration letters, all other Renewable Energy Development Rights are transferable, but prior approval is required.

1.Transferability by Certificate Type

(a) Resource Exploration Letter: Non-transferable and non-assignable.

(b) Project Pre-Approval (PPE): Transferable with approval from the Minister of MPEMR.

2.Procedures and Conditions:

The transferor submits a transfer application, proof of the transferee's technical and financial capacity, a clean criminal record certificate, and a letter of succession. The competent authority completes public notice and hearings within 30 days of receiving these documents. Upon approval, fixed amendment fees and annual processing fees must be paid to SREDA within 10 working days.

FIVE.Financing and Guarantees^[5]

While Bangladesh's renewable energy projects can generate stable revenues through feed-in tariffs or net metering policies, the Electricity Act and Energy Regulatory Commission (BERC) regulations stipulate that such revenue rights are separated from project asset ownership and cannot be used for collateral financing. This aims to ensure power supply security and national strategic control. Consequently, investors cannot obtain financing by directly pledging project revenue rights. However, since the promulgation of the Renewable Energy Policy 2025, all equipment, components, and raw materials used for renewable energy production are exempt from import duties and value-added tax (VAT). Projects commissioned between July 2025 and June 2030 are eligible for a full tax exemption for 10 years, followed by a 50% tax reduction for the subsequent 5 years. All renewable energy generation equipment and raw materials, accompanied by test reports from accredited laboratories, are exempt from import duties and VAT. Foreign investors may also benefit from additional preferential policies offered by economic zones and export processing zones.

SIX.Dispute Resolution

（One）Domestic Level

Disputing parties may first apply for mediation to the Renewable Energy Dispute Mediation Committee within SREDA within 60 days. Appeals against mediation outcomes may be filed with the BERC Arbitration Tribunal, and arbitration awards may be enforced through court application.

（Two）International Arbitration

1. Parties may also opt for international arbitration, such as arbitration under ICC or SIAC rules.

2. Bangladesh is a signatory to the ICSID Convention, but an "irrevocable waiver of sovereign immunity" must be explicitly stipulated in the investment agreement or government guarantee letter.

Notes：

[1]https://mp.weixin.qq.com/s/oi7kpC9to2lNCzeLEL3Kow

[2]《Energy Efficiency and Conservation Master Plan up to 2030》

https://policy.asiapacificenergy.org/sites/default/files/EEC_Master_Plan_SREDA_2.pdf

[3]https://mchuneng.in-en.com/html/chunengy-46040.shtml

[4]https://mp.weixin.qq.com/s/n0KHCHGcJ5IQ7C67CAa4S

[5]https://cpd.org.bd/resources/2024/10/CPD_Policy-Brief-24-Chinese.pdf

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