Bangladesh’s Summit Group is preparing to enter the country’s rapidly expanding data centre market and aims to begin work with an external business partner within the next year, its chairman Muhammed Aziz Khan has said in an interview with Nikkei Asia.

The group’s first data centre is expected to be developed using the gas-based generation capacity of Summit Power International, the energy arm of Summit Group and Bangladesh’s largest private power producer. However, Aziz acknowledged that the plan raises questions at a time when Bangladesh is seeking to reduce greenhouse gas emissions and transition away from fossil fuels.

“Summit Group’s next phase [of growth] focuses on integrating energy and data, leveraging our LNG and fibre-optic expertise,” Aziz said.

Summit Power currently accounts for around 7% of Bangladesh’s installed power generation capacity through 10 gas-fired plants and five oil-based plants. Another group subsidiary, Summit Communications, operates a nationwide fibre-optic network that serves nearly half of the country’s internet demand – a key advantage as data consumption accelerates.

Demand for data centres in Bangladesh is rising as higher internet and smartphone penetration fuels the use of cloud services, mobile applications and artificial intelligence. The government has also invested heavily in broadband expansion and digital infrastructure, according to the Japan International Cooperation Agency (JICA).

Bangladesh’s Personal Data Protection Ordinance, adopted last year, could further increase demand for local data centres by limiting the overseas transfer and processing of personal data, said JICA expert Akihiro Shoji.

“For now, private investment is limited to small-scale data centres due to vulnerabilities in power and internet infrastructure. Political instability is also a country risk,” Shoji said.

“But the nation’s potential to function as a regional data centre hub is not low, as the domestic market is expected to grow steadily.”

Summit is now seeking partners with experience in building and marketing data centres. Such collaboration would help ensure that the planned facility keeps pace with rapidly evolving technological standards, Aziz said.

“Some of the ‘Magnificent 7’ have shown interest,” he added, referring to Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. Summit hopes to secure a customer within this year.

The proposed data centre would likely be located near Dhaka, close to Summit Power’s gas plants. Aziz said the group’s key competitive edge lies in speed, as it already controls three critical inputs – electricity, fibre and land.

“While data centres can take several years to develop, we can make them available for customers in a year and a half,” he said.

However, the energy-intensive nature of data centres poses challenges for Bangladesh’s climate goals. Only about 2% of the country’s electricity came from renewable sources in 2024, according to energy think tank Ember, although the government aims to raise that share to 25% by 2035.

Meeting growing power demand while expanding renewables remains difficult, particularly given land scarcity in one of the world’s most densely populated countries.

“Until about two years back, we were trying to target ourselves to be along with the whole world, [thinking] that by 2050 we should be disposing of all our hydrocarbon-based generation,” Aziz said. “Now, Bangladesh’s circumstances as well as global circumstances have changed, so we have to recast that model” to include technologies such as carbon capture.

Summit is also exploring cross-border solar and hydropower projects with India, Nepal and Bhutan to import cleaner electricity, though Aziz said progress has been constrained by bilateral political relations.

Bangladesh’s ties with India have deteriorated since the 2024 ousting of former prime minister Sheikh Hasina, who fled to India and remains there. The political upheaval has also affected renewable energy investment.

Summit’s planned 500-megawatt offshore wind project – being developed with Danish investors – has been delayed amid political uncertainty, despite prefeasibility and geographical studies having been completed, Aziz said. The interim government repealed a law that previously provided the legal framework for energy contracts, citing transparency concerns.

Despite these challenges, Aziz said Summit remains optimistic as Bangladesh prepares for parliamentary elections and a referendum on political reforms in February.

Summit Power, which is headquartered in Singapore to attract global investors, has seen potential backers become “very cautious” due to political instability. Still, Aziz said “the desire to invest into the opportunities of Bangladesh continues to exist,” pointing to the country’s large middle class and strong export base.

“For investment, the essential foundations are rule of law, democracy and policy predictability,” he said. “A prime minister elected by the people would hopefully be able to give at least five years of certainty in their policymaking.”