- Challenges in Business Establishment Stage
Administrative Challenges in Company Formation
a) Complex Procedures:
Forming a company requires numerous documents (e.g., Memorandum, Articles of Association, Forms I, VI, IX, X, XII), demanding legal and technical expertise.
First-time foreign investors often face delays due to complex norms and lack of coordination among multiple agencies.
b) Partial Digitalization:
While some steps are online, many still require physical visits and paper submissions.
Inconsistent digital platforms across agencies cause confusion and prolong the process.
c) Foreign Investor Barriers:
Foreigners must open temporary bank accounts, transfer capital, and obtain encashment certificates, all involving complex banking and strict documentation.
Limited English-language resources add further difficulty.
d) Multiple Licensing Requirements:
Post-registration, investors must secure several licenses (e.g., Trade License, TIN, VAT, Factory License, Environmental Clearance), each with separate applications and procedures, leading to long delays and administrative burden.
Additional Administrative Barriers
e) Duplicate Document Submissions:
Investors must submit the same documents (e.g., passport copies, TIN, photos) multiple times to different offices due to the lack of a shared digital system.
This duplication wastes time, increases paperwork, and leads to errors.
f) Limited Information and Support:
Government websites often lack clear, updated guidance on licensing procedures. As a result, investors frequently depend on paid consultants.
There is no central support system to guide them through the full setup process.
g) No Centralized Digital Portal:
There is no single online platform covering all steps to start a renewable energy business.
Investors must navigate multiple websites and visit various offices, causing delays and added frustration.
- Challenges in Project Implementation Stage: Solicited Process
While BPDB’s open tender process is a positive step toward transparency, several operational and structural issues remain:
a) Digital Infrastructure:
The process remains partially paper-based, requiring physical document submissions.
This increases the risk of administrative delays and errors, especially for foreign investors without a local office to support the process.
b) Prolonged and Multi-Layered Approval Process:
After technical evaluation, proposals must pass through the BPDB Board, the Ministry, and the Cabinet Committee on Government Purchase (CCGP). This extended clearance timeline discourages serious investors and delays project initiation.
While implementation in India can take 3-4 months, in Bangladesh it may take years, posing financial risk due to the time value of idle capital.
c) Unpublished Proposal Status:
The current process lacks status updates for bidders during evaluation.
Though meant to avoid external influence, this lack of transparency creates uncertainty and lowers investor confidence.
d) Challenges Related to Land Development:
BPDB only identifies a general development area; bidders must acquire land after receiving the Notification of Award (NoA). This can lead to price inflation and disputes, as landowners raise prices once an area is announced.
Foreign investors face added difficulty due to unfamiliarity with local systems. Previously, under the unsolicited process, investors could secure land before submitting proposals, avoiding such challenges.
e) Absence of Notifying Mechanism:
The One Stage Two Envelope Tendering Method disqualifies proposals over minor technicalities or formatting errors, even if otherwise viable.
There is no system to notify bidders of incomplete submissions. Additionally, there is no active bidder helpline or FAQ section on official websites.
f) Risk of Informal Pressure:
Despite the multi-layered submission process meant to limit political interference, the absence of a unified monitoring or grievance redress system still leaves room for informal influence.
g) Absence of Separate Page on the PPA Website:
Currently, tender announcements across all sectors are listed together, without a dedicated section for power sector tenders.
This makes it difficult for foreign investors, especially those unfamiliar with the user interface, to find relevant opportunities.
- Challenges in Developing Roof-top Solar Projects
a) Capacity limitations for establishments:
For example, if an establishment has a demand of 2MW, it is not allowed to install more than 2MW of solar capacity.
If there is excess production, that would feed into the grid, requiring the government to pay for the surplus energy. From the perspective of the government, if there is higher limit, it would be an issue while balancing supply and the demand of power at a moment.
Additionally, the capacity of the nearby transformer is also a critical factor in determining installation limits.
b) Risk associated with projects using OPEX model:
The Operational Expenditure model of rooftop solar is a financing and ownership arrangement where the consumer does not buy or own the solar system. Instead, a third-party solar service provider (SSP) installs, owns, operates, and maintains the rooftop solar system on the consumer’s premises.
The consumer only pays for the electricity generated by the solar panels, usually through a Power Purchase Agreement (PPA).
If a firm installs solar defaults, the solar system will continue producing power, incurring costs with no responsible party to cover them.
The BSREA is suggesting a tripartite agreement involving the government to mitigate risks and ensure financial security.
Source: CPD Study
