Adani pressed by Bangladesh to reopen power deal
FROM PAGE B1
The company said the Bangladesh deal helped further Indian foreign policy objectives and Delhi in 2019 declared the plant part of a special economic zone. It enjoys incentives such as exemptions on income tax and other levies.
The power supplier was required to inform Bangladesh swiftly of changes in the plant’s tax status and to pass on the “benefit of a tax exemption” from India’s government, according to the contract and implementation agreement signed on November 5, 2017 between Adani Power and the state-run Bangladesh Power Development Board (BPDB).
But Adani Power did not do so, according to letters sent by BPDB on September 17, 2024 and October 22, 2024 that urged it to remit the benefits. The agreements and letters are not public but were seen by Reuters.
Two BPDB officials, who spoke on condition of anonymity because they were not authorised to talk to the media, said they did not receive responses.
BPDB estimates savings of roughly 0.35 cents per unit of power if the benefit was passed on, the officials said. The Godda plant supplied 8.16 billion units in the year to June 30, 2024, according to an undated Bangladesh government summary of power purchases seen by Reuters, suggesting potential savings of about $28.6 million.
Power minister Khan said the savings would be a key part of future discussions with Adani Power.
‘NEGOTIATED HASTILY’
Bangladesh in November scrapped a 2010 law that allowed Hasina to award some energy deals without a competitive bidding process.
The absence of tenders is unusual, said Tim Buckley, director of Australia’s Climate Energy Finance think-tank, adding that auctions ensure “the best price possible.”
In September, Yunus’s government appointed a panel of experts to examine major energy deals signed by Hasina. A Bangladesh court has separately ordered a probe of the Adani deal.
Another panel asked to study the economy said in a white paper submitted to Yunus on December 1 that the US charges against Adani meant Bangladesh should “scrutinise” the power deal, which it described as “negotiated hastily.”
Hasina, who has not been seen in public since she fled to India, could not be reached. Her son and adviser Sajeeb Wazed told Reuters he was not aware of the Adani Power deal but that he was “sure there was no corruption.”
“I can only assume the Indian government lobbied for this deal so it was made,” he said in response to allegations of political interference.
Modi’s office and other Indian officials did not respond to requests for comment.
HARDBALL
On October 31, Adani Power halved the power supply from Godda in response to the payment dispute with Bangladesh.
The company in a July 1 letter seen by Reuters also rejected a request from BPDB to extend a discount it had offered until May - resulting in savings of about $13 million for Bangladesh. It said it would not consider further discounts until payment was cleared.
Adani Power contends it is owed $900 million, while BPDB says arrears are about $650 million. Bangladesh suffers from a dollar shortage and BPBD officials told Reuters they haven’t been able to obtain sufficient foreign currency for payment.
The halving of supply particularly angered Bangladesh, BPDB Chair Md Rezaul Karim said, because it came after Dhaka in October remitted $97 million to Adani Power - its highest monthly payment this year.
The dispute revolves around how power tariffs are calculated, with the 2017 agreement pricing off an average of two indices.
The unit cost of energy from Godda was 55 percent above the average of all Indian power sold to Dhaka, according to the summary of Bangladesh’s power purchases.
Bangladesh is pressing for Adani Power to use other benchmarks that would lower the tariff after one of the indices was revised last year, said three BPDB sources.
Adani Power has rejected that, one of them said, adding the two sides were meeting soon.
The agreements stipulate that arbitration be carried out in Singapore, but Khan said Bangladesh’s next move depended on the outcome of the court-ordered investigation.
“If it is proven that bribery or irregularities had happened, then we will have to follow the court order if any cancellation happens,” he said.