Dhaka - Bangladesh's interim government has set an ambitious target of meeting 10 per cent of its total electricity production from renewable sources by 2020, media reports said Thursday. To encourage setting up green energy plants, the government has also offered tax holidays for investors in the next five years.

"Investment in this sector from local and international investors will enjoy corporate income tax rebates for five years from now," New Age newspaper reported, quoting an official at the Chief Adviser's Office.

The interim cabinet headed by caretaker government leader Fakhruddin Ahmed approved the policy Wednesday. Bangladesh produces slightly more than 4,000 megawatts of electricity, which accounts for only 30 per cent of the country's total power demand.

An Energy Division official said the government had long been working on a policy to expand alternative energy resources as Bangladesh suffers from a shortage of conventional resources such as gas to generate electricity.

The policy identified solar and wind power, biomass, biogas and hydro-electricity as the country's major renewable energy sources.

So far, around 200,000 household solar photovoltaic units have been installed in Bangladesh, mostly by non-government organisation Garmeen Shakti, run by Nobel laureate Professor Muhammad Yunus.

They meet an insignificant portion of household power demands in rural Bangladesh.

"With a good to excellent solar resource available, there is a strong potential for solar photovoltaic (power) within an overall rural electrification programme, if affordable products that meet consumer needs can be supplied and supported," a policy document said.

Under the policy, the authorities will set up a Sustainable Energy Development Agency for development and promotion of renewable energy and energy efficiency. The document said Bangladesh has a strong potential for biomass electricity production from sources such as husks, crop residue, wood, jute, animal waste and sugarcane residue while biogas plants, mostly based on animal and municipal wastes, might be the most promising renewable energy. (dpa)