Encouraging Foreign Direct Investment (FDI) in Bangladesh’s Power Sector: The key factors for long-term investment sustainability (SpringerBriefs in Energy)

This book identifies and investigates the determinants that influence investment decision-making for conducting foreign direct investment (FDI) in Bangladesh’s power sector. This book is organized around six core themes. These are: Bangladesh’s vision to become a middle-income country by 2021 and have universal power for all; an overview of the benefits and costs of FDI from a host nation’s perspective; an outlook of Bangladesh’s power sector starting from the years 1994-2008 through 2011-2015 to 2016-2020 and beyond; the key factors that encourage foreign investors to conduct FDI in the Bangladeshi power sector subsumed under four broad categories of investment prospects namely, regulatory, economic and financial, political and social; the key barriers that deter FDI in the Bangladeshi power sector; and policy implications for long-term investment sustainability in the power sector. The main arguments posited in this book are: regulatory aspects are the most important for firms when conducting FDI in the power sector; land acquisition is a perineal problem that continues to hamper the development of large-scale power projects; there is a need for a transparent and competitive selection process to improve transparency and accountability in private power procurement; and more exploration of onshore and offshore gas fields with the extension of gas transmission networks be enhanced that ensure a regional balance of primary energy supply (gas) for setting up additional gas-based power plants in the country. Preface Contents About the Author Acronyms Chapter 1: Introduction References Chapter 2: Benefits and Costs of FDI 2.1 Employment Effects of FDI 2.2 Resource Transfer Effects of FDI 2.3 Balance of Payment Effects 2.4 Effect on Competition and Economic Growth 2.5 Adverse Effects on Competition 2.6 Adverse Effects on the Balance of Payments 2.7 Effects on National Sovereignty and Autonomy of Host Countries 2.8 Summary References Chapter 3: An Overview of the Bangladesh Power Sector 3.1 Post-Independence 3.2 Post-2000 3.3 The Sixth Five Year Plan 3.3.1 Raise in Installed Power Generation Capacity 3.3.2 Strategies Adopted in the Sixth Five-Year Plan to Meet the Development Targets 3.3.2.1 Mobilization of Private Investment in Power Generation 3.3.2.2 Power Sector Efficiency 3.3.2.3 Power Trade 3.3.3 Concerns of Achieving the Targets in the Sixth Five-Year Plan 3.3.4 Progress of Sector Reforms in the Sixth Five-Year Plan 3.4 Seventh Five-Year Plan 3.4.1 Strategies for Attaining the Growth Targets in the Seventh Five-Year Plan 3.4.1.1 Mobilizing IPPs 3.4.1.2 Electricity Expansion through Renewable Energy 3.4.1.3 Demand Side Management 3.4.2 Structure of the Electric Power Sector of Bangladesh and Future Unbundling 3.4.3 Progress Made in the Seventh Five-Year Plan 3.5 The Eighth Five-Year Plan and Future Challenges for Achieving the Development Targets 3.6 Summary References Chapter 4: Determinants 4.1 Four Areas of FDI Determinants 4.2 Methodology 4.3 General Results 4.4 Regulatory 4.4.1 Government Commitment to Contracts 4.4.2 Land Acquisition/Rent/Lease 4.4.3 Tax Exemptions 4.4.4 Avoidance of Double Taxation 4.4.5 Protection of Foreign Investors Act 1980 4.4.6 Profit Repatriation Controls 4.4.7 Presence of Government Guarantees 4.4.8 Time and Efficiency of Staff to Complete Procedures 4.4.9 World-Class Security Package 4.4.10 Protection of Property Rights 4.4.11 Quick Allocation of Work Permits 4.4.12 Approval of Central Bank for Transferring Capital 4.4.13 Environmental Regulations 4.4.14 Need for Internationally Accepted Environment and Social Impact Assessment for Large Projects 4.4.15 Property Registration 4.4.16 Regulations on Health, Hygiene, and Safety of Workers 4.4.17 Responsiveness of Needs and Time Frame of Investors 4.4.18 Level of Administrative Competence 4.4.19 Construction Permit 4.4.20 Continuity and Consistency of Rules and Processes 4.4.21 Bangladesh Arbitration Act 2001 4.4.22 Regulation on Qualification of Personnel Who Supervise Construction 4.5 Economic and Financial 4.5.1 Economic Growth and Development 4.5.2 Gas Transmission Line 4.5.3 Government Spending for Infrastructure 4.5.4 Financial Facilities 4.5.5 Credit Facilities 4.6 Political 4.6.1 Coordination and Collaboration Between Ministries 4.6.2 Accountability of Public Officials 4.6.3 Control of Corruption 4.6.4 Capacity to Adapt Policies 4.7 Social 4.7.1 Citizen Security and Accountability 4.8 Summary Appendix Part 1: Semi-Structured Interview Questions for Finding the Factors and the Inhibitors Generating Power Sector FDI Part II: Personal Information Part III: Factors/Determinants Influencing FDI Decision Making in Bangladesh’s Power Sector References Chapter 5: Barriers 5.1 General Results 5.2 Principle Barriers Impeding FDI in the Power Sector 5.2.1 Long Approval Process of IPPs 5.2.2 Inadequate Gas Transmission System 5.2.3 Political Interferences 5.2.4 Lack of Accountability of Public Officials 5.3 Summary Appendix Part I. Obstacles/Barriers Influencing FDI Decision-Making in Bangladesh’s Power Sector References Untitled Chapter 6: Summary and Policy Implication 6.1 Summary 6.2 Policy Implication 6.2.1 Making the Bid Evaluation Structured and Time-Constrained 6.2.2 Use of Power Hubs 6.2.3 Strengthening the Central Procurement Technical Unit (CPTU) 6.2.4 Having Highly Professional and Reputed People Doing the Tender Evaluation and Award 6.2.5 Exploration of Onshore and Offshore Gas Fields 6.2.6 Development Plan and Renewable Target 6.2.7 Priority Access to the Grid 6.3 Suggestions for Future Research References Index