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Power & Energy - March 6, 2023

Adani power deal under scanner

Farid Hossain: The Adani Group of India will likely be ready to supply power from its 1600-MW coal-fired plant in Godda, Jharkhand by next week. In 2017, state-owned Bangladesh Power Development Board signed the deal with the Indian conglomerate for direct and exclusive purchase of electricity through a 400 KV transmission line that will cross through West Bengal’s Murshidabad into northern Bangladesh.
But before the electricity arrives the call for cancellation of Bangladesh’s PPA agreement with the group is getting louder. Some finds the deal ‘unfavourable’ to Bangladesh.
The Transparency International Bangladesh (TIB) has called for the reconsideration and, if necessary, cancellation of what it described as the opaque and discriminatory contract with Adani Group. The call came as Hindenburg Research, an American short seller, shook the Indian tycoon’s company with bombshell accusing it of share manipulation and accounting fraud. Following the report, the Adani shares crashed wiping out billions of dollars in just weeks pushing down the billionaire businessman from the world’s third richest to now below 27.
In the statement issued last week TIB expressed its deep concern that Bangladesh’s power sector could become hostage to the controversial company if the agreement to purchase 1,600MW of electricity from India’s Adani Power is executed by the BPDB.
“For the sake of national interest, especially considering that the final burden of the agreement will be borne by the people of the country”, the TIB suggested a thorough analysis of the terms of the agreement involving experts in the relevant sectors, formation of amendments where applicable and termination of the agreement if necessary.
Bangladesh’s power purchase deal with Adani Power (Jharkhan) Ltd (APJL) came under a scanner following reports of The Washington Post and the United News of Bangladesh. According to UNB, power officials in Bangladesh are considering making a request to Adani group for a revision of the deal on the question of the price of coal being quoted by the Indian company.
According to media reports Adani has demanded about $400 for each tone of coal for running its Godda plant the same coal can be bought for $250, according to the PDB. In fact, the prices of coal quoted by Payra thermal power plant and another coal-fired plant of local SA Alam group are much lower than being quoted by Adani Godda plant. Adani sought a 60 percent higher price because of a unique PPA provision for fixing the coal price by combining Indonesian and Australian coal prices, said one media report.
India’s Adani Group is facing troubles from all sides it seems. AdaniWatch, a non-profit research group, has raise allegations on manipulation of Indian rules and regulations to get unfair benefit from the deal with Bangladesh. The group works to expose the ‘misdeeds of the Adani Group across the world.
In a detailed report published recently AdaniWatch claimed that the contract between Bangladesh and Adani may be “legally invalid.” In a co-authored article, Ravi Nair, an independent Indian journalist, says there are at least two issues that may allow either parties to scrap the deal altogether. According to India’s Guidelines on Cross Border Trade of Electricity, coal-fired power plants owned by private companies would only be allowed to export electricity if they had surplus capacity. AdaniWatch says India still doesn’t have power surplus, and bending the rules by the state of Jharkhand to exempt Adani may not be legal.
According to AdaniWatch the power purchase agreement (PPA) “ stipulates that APJL must inform PDB of any changes in law that might affect these assumptions within 30 days of such an occurrence, and any variation shall be adjusted in the reference capacity price.” Clearly, the PPA was signed without informing the BPDB about the changes that hugely cut APJL’s tax liabilities. AdaniWatch asks whether these changes were notified to the other contracting party, and if it wasn’t, the agreement may be legally voided by the BPDB for breach of contract.
Not much is being explained by the government of Bangladesh on this controversy.
The issue should have been debated in the parliament for the people to know what has been agreed in the contract and whether it goes against the national interests.

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