Bangladesh seeks to renegotiate Adani power deal amid court investigation
2/12/2024 6:09
Bangladesh wants to sharply
lower prices under a power purchase deal with India's embattled
Adani Group unless it is cancelled by a court, which has called
for an investigation into the 25-year deal, its de facto energy
minister told Reuters on Sunday.
Adani Group founder Gautam Adani is already facing
allegations by U.S. authorities that he was part of a $265
million bribery scheme in India, charges he has denied, even as
one Indian state reviews a power deal with the group and
France's TotalEnergies pauses its investments.
In Bangladesh, based on an appeal by a lawyer demanding the
power deal's potential cancellation, the High Court last week
ordered a committee of experts to examine the contract under
which Adani supplies power from a $2 billion coal-fired plant in
eastern India. The investigation is expected to be concluded by
February, when the court is due to make its order.
The deal was signed in 2017 by Adani and a government entity
under Prime Minister Sheikh Hasina, who was ousted this year
amid a popular uprising and accusations of widespread
corruption. Supply from the 1,600 megawatt plant, which uses
expensive imported coal, started last year and meets about a
tenth of Bangladesh's consumption.
"Renegotiate in case of anomalies in the contract. Cancel
only in case of irregularities such as corruption and bribery,"
Muhammad Fouzul Kabir Khan, Bangladesh's power and energy
adviser, said in an interview in his office.
"Both based on the findings of the
court-ordered investigations."
He said some issues, such as Bangladesh not benefiting from
some Indian tax exemptions to the power plant, have already been
flagged to Adani and could partly form the basis of a deal
renegotiation.
Adani did not immediately respond to a request for comment
on the weekend. Adani Power Ltd said in its latest
annual report that the plant in India's Jharkhand state would
provide Bangladesh uninterrupted, reliable and affordable
electricity and "significantly reduce the average cost" for the
end consumer.
Khan said the U.S. corruption allegations against Adani
themselves may not have any bearing on the Bangladeshi deal.
A separate committee formed by Bangladesh's interim
government is already probing the Adani deal and six other power
contracts with the aim to ensure the investigations "will be
acceptable in international negotiations and arbitration", said
a government statement.
At 14.02 taka a unit, Adani charged the highest rate for
Indian-generated power to Bangladesh in the 2022/23 fiscal year,
compared with an average price of 8.77 taka ($0.0737), according
to the state-run Bangladesh Power Development Board.
Adani's rate fell to 12 taka a unit in 2023/24, still 27%
higher than the rate of India's other private producers and as
much as 63% more than Indian state-owned plants, Reuters has
reported.
The retail price in Bangladesh is 8.95 taka per unit, which
results in an annual power subsidy bill of 320 billion taka for
the exchequer, Khan said.
"Because the prices are high, the government has to
subsidise," Khan said. "We would like power prices, not only
from Adani, to come down below the average retail prices."
Bangladesh, however, will keep paying for the power it is
importing from Adani, he said. The company had recently halved
its supply because of a delay in payment.
Khan said Bangladesh has enough domestic capacity to meet
its needs, though some plants are currently idle or generating
below capacity because of a shortage of gas or other reasons.
"When Adani cut their supply to half, nothing happened," he
said. "We will not allow any power producer to blackmail us."
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