Bangladesh seeks revision of power deal with Adani amid court investigation

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Foreign Correspondent
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X: @the_news_21

Dhaka: Bangladesh has expressed its intent to renegotiate its 25-year power purchase agreement (PPA) with India’s Adani Group, unless the deal is nullified by an ongoing court investigation.

According to energy advisor to the interim government in Bangladesh, Muhammad Fouzul Kabir Khan, the focus is on addressing anomalies and ensuring fair pricing, especially in light of recent developments surrounding the Adani Group.

Adani Group, headed by Gautam Adani, is facing allegations from the U.S. authorities over a $265 million bribery scheme related to Indian deals, charges the company has denied. Meanwhile, one Indian state government is reevaluating its power agreements with the group, and global energy giant TotalEnergies has paused its investments in Adani-linked power projects.

The power deal in question was signed in 2017 under the leadership of then prime minister Sheikh Hasina, who was ousted earlier this year amid allegations of corruption and a popular uprising.

The agreement involves electricity supply from a 1,600 MW plant in India’s Jharkhand state that operates on costly imported coal. The thermal power plant began operations last year and currently contributes to around 10% of Bangladesh’s electricity demand.

Khan clarified that while the deal might not be directly impacted by the U.S. bribery allegations, issues such as Bangladesh not benefiting from certain Indian tax exemptions tied to the power plant remain critical concerns. These, among other flagged irregularities, could form the basis for renegotiation.

Adani Power company has in its latest annual report emphasised that the Jharkhand plant offers reliable and affordable electricity to Bangladesh, arguing that it would lower the average cost for consumers. However, data shows the tariff rates charged to Bangladesh have been significantly higher than those of other Indian power producers.

During the 2022/23 fiscal year, Adani charged 14.02 taka per unit—substantially higher than the 8.77taka average rate from other suppliers. Though this rate dropped to 12 taka per unit in 2023/24, it remains 27% higher than rates from other private Indian producers and up to 63% more than state-owned Indian plants. The government has been forced to subsidise these costs, resulting in an annual power subsidy bill of 320 billion taka.

Despite these challenges, Khan noted that Bangladesh has sufficient domestic capacity to meet its power needs, with some plants currently underutilised due to gas shortages or operational issues. He emphasised the need for protecting the country’s interests, saying, “We will not allow any power producer to blackmail us.”

The court-ordered investigations, along with a government committee’s review of the Adani deal and six other power contracts, aim to ensure transparency and provide leverage for any potential international negotiations or arbitration.

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