PDB incurs yearly Tk 15,000cr loss

Power contract with Adani

Staff Correspondent: During the Awami League government, Bangladesh signed an agreement with India’s largest industrial group Adani to build a coal-fired power plant with a capacity of 1,498 MW. According to the agreement, the Bangladesh Power Development Board (PDB) will buy electricity from this plant built in Godda, Jharkhand, India for 25 years. Inequality is inherent in these long-term contracts. There are many conditions in the agreement, due to which Adani will take an additional Tk 375 thousand crore from Bangladesh in 25 years. According to that, Bangladesh will suffer a loss of Tk 15 thousand crores per year.
An analysis of PDB’s agreement with Adani shows that the entire agreement is structured in such a way that Adani Group benefits. According to the agreement, how much electricity Bangladesh will take every 3 months, must be announced in advance. If Bangladesh consumes less electricity than this, it will have to pay the price equal to the declared amount. But PDB takes as much electricity as it needs from the private power plants in Bangladesh. For this, it is not necessary to send the demand three months in advance.
According to the agreement, Adani can sell power to third parties if it so chooses. If the center gets a higher price from the third party, Bangladesh will be at risk if they sell power there. Bangladesh and India require more electricity during summer. Now if Adani supplies electricity to India in summer and to Bangladesh in winter, it will not be profitable for Bangladesh.
Incidentally, after the fall of the Sheikh Hasina government on August 5, India changed its power purchase policy on August 12. Under the new policy, India’s public and private sector entities will be able to purchase electricity from Adani’s Godda power plant.
Adani’s plant has an installed capacity of 1,498 MW. As per the agreement, PDB can never take power below 34 percent from this plant. Even if Bangladesh consumes less electricity, Bangladesh will pay Adani the full price of the coal used to produce 34 percent of the electricity. Adani will get not only the price of coal, but also the cost of coal transportation, port charges and transportation of coal.
The 1,320 MW power plant of the government company RPCL and Norenko, established at Payra in Patuakhali, will get the cost of 493.48 grams of coal per unit of power generation. But for the same amount of electricity, Adani will get 555.43 grams of coal. Due to the additional cost of coal, Adani will take Tk 6000 crore more annually.
Adani has also received higher capacity payments due to unequal contracts. Capacity payments have four parts. These are Variable Center Rent, Fixed Center Rent, USCP Index (United States Inflation Rate) and Maintenance Fee. Adani’s electricity will only incur a capacity payment of around 6 cents per unit, which is Tk 7.20 in the local currency. According to that, Adani will take about Tk 9.5 thousand crore per year only for the rent of the center. The average capacity charge per unit of gas-based and oil-based private rental power plants in Bangladesh ranges from 90 paisa to Tk 1.20.
In the contract with Adani, the coal system loss has been fixed at 1.10 percent. In other words, Adani can claim that 1,100 tons of coal was wasted during transportation of 1 lakh tons of coal. Two power plants at Payara and Rampal plant have not been provided for system losses.
Adani lied about coal prices in India itself
The cost of power plant fuel is called pass-through. This means that the price of coal, gas or oil in the market can be demanded from the customer as the bill. Adani has its own coal mines in Australia, South Africa and Indonesia. They show the price of coal always higher than the market.
Two engineers of PDB told that India’s Customs Intelligence Department (Directorate of Revenue Intelligence or DRI) submitted a report in this regard to the Government of India in July 2016. It is said that the coal importers have shown 50 to 100 percent higher prices than the actual import price. The report also mentions that they have smuggled this money.
Despite knowing risk
A former official of the power department told that the government formed a 6-member committee in 2016 with Sheikh Faizul Amin, joint secretary (development) of the power department, to buy power from Adani. The committee opined that Adani Group’s electricity price is higher than that of Bangladeshi companies. However, the committee recommended buying power from Adani for a period of 25 years. However, it is suggested by the committee to bring this agreement under the Rapid Supply of Electricity and Energy Act. According to this law, the contract with Adani cannot be approached in any court of the country. At that time, Nasrul Hamid was the State Minister for Power. He could not be contacted by phone yesterday. His mobile phone was switched off. And at that time the Secretary of Electricity Department was Ahmed Kaykaus. It was not possible to contact him. He now lives in the United States.
Adani’s agreement with PDB was signed on November 5, 2017. Engineer Khalid Mahmud was then chairman of PDB. Khalid Mahmud spoke with this reporter recently. He said, the incident is quite old. It’s been a long time. We execute PPA (Power Purchase Agreement) following international standards and procedures. As a result, there should not be major inconsistencies in the contract.
Consumers Association of Bangladesh (CAB) Energy Advisor Professor M Shamsul Alam told over the phone, “Adani’s contract must be cancelled.” Bangladesh has lost everywhere in this agreement. He demanded immediate cancellation of the agreement with Adani.