Adani seeks special concessions for selling electricity generated for Bangladesh
Last Updated on December 11, 2024 6:27 am
Indian industrial group Adani has sought special concessions from the government to sell some of the electricity generated at its Godda Power Plant in Jharkhand. The BJP government led by Narendra Modi has been asked for special concessions in India as Bangladesh has not paid its dues properly.
Indian media outlet The Hindu Business Line reported this information, citing multiple sources.
The report said that Adani Power Limited is demanding new facilities from the government for its $2 billion coal-fired power plant located in the eastern Indian state of Jharkhand. The only buyer of this power plant is Bangladesh. However, the company claims that they are in trouble because Bangladesh has not paid its dues properly.
Sources who did not wish to be named said that Adani Power has demanded from the Commerce Ministry to continue the duty-free facility for imported coal used to run this plant. Without this facility, Adani’s electricity price will be higher than the price of electricity in the Indian market. As a result, it will become practically impossible to sell electricity to customers.
Adani Power did not respond to an emailed request for comment.
Adani’s Godda power plant supplies about a tenth of Bangladesh’s total electricity consumption. As of September, the company’s outstanding dues to Bangladesh stood at $790 million. Bangladesh has already paid some of the dues and said it will continue to pay.
In August, India’s power ministry allowed Adani to sell power from the plant within India. But since the plant is located in a special economic zone, domestic sales are blocked by laws.
Therefore, unless India’s commerce ministry grants special exemptions, the electricity produced will be considered imported and Adani’s electricity will be taxed.
The ‘Power Purchase Agreement’ between Adani Power (Jharkhand) Limited and the Bangladesh Power Development Board (BPDB) was signed on November 5, 2017, when Bangladesh Prime Minister Sheikh Hasina was visiting Delhi.
The amount of electricity Adani’s power plant would supply to Bangladesh for how long, at what price, and under what conditions – all of these were specified in the agreement. Although the agreement was not made public at the time.
Much later, in early 2023, the Australia-based watchdog ‘Adani Watch’ published a detailed report on the 163-page agreement. By then, however, there had been a heated debate inside and outside Bangladesh about various clauses of the agreement.
A Washington Post report quoted an international energy expert as saying that the agreement was such that they would be forced to buy electricity from Adani at a price at least five times higher than the market price for bulk electricity in Bangladesh.
A private research report published in 2022 said that Bangladesh was paying Adani more than $11 billion in ‘capacity charges’ over the next 25 years to buy electricity from this project – an amount that could build three Padma bridges or nine Karnaphuli tunnels in the country. Many experts also questioned the 25-year ‘lock-in period’ included in this ‘PPA’.
Because in the agreement, the Bangladesh government gave Adani a ‘state and sovereign guarantee’ that it would buy all the electricity generated at Godda for the next 25 years.