New Delhi: Sheikh Hasina’s exit from Bangladesh has posed a question mark on the prospects of the Adani Power coal-fired plant in Godda, Jharkhand, which is contracted to supply 1,600 megawatt (MW) power to Bangladesh. This marks the entire production capacity of the Godda facility.
Since the change of power and the installation of an interim government led by Nobel laureate Muhammad Yunus, calls for a review of the Adani Group power supply agreement have gained momentum in Dhaka. The reason cited for this proposal is cost savings to the Bangladesh exchequer, something which holds importance in the current cash crunch faced by the country, the Financial Express of Bangladesh reported.
How much does Bangladesh pay Adani group for power supply
As part of the deal, Bangladesh Power Development Board officials are of the opinion that the deal can be reviewed to reduce the monthly $100 million outgo to Adani in exchange for power supplied from the Godda plant. A senior BPDB official suggested a tariff review that could save up to 50 per cent of the amount mentioned above, according to the report.
Bangladesh government pays 15 taka per unit for power secured from the Adani plant as part of a deal inked in 2017. The actual power supply from the Godda plant started in April 2023.
The price of electricity supplied by Adani Power is almost double that of the cost of power secured from Indian state-owned plants (5.50 Bangladeshi taka) and private plants (8.50 Tk). BPDB officials suggest that the annual $1.2 billion payout to Adani Group will cost $30 billion over 25 years. This can be halved to $15 billion, according to the report.
Why Bangladesh may sever the deal
To be sure Adani Group agreed to cut power tariffs following domestic criticism in Bangladesh. However, this revision is made on an adhoc basis with monthly rates negotiated between BPDB and Adani Group, the FE Bangladesh reported.
According to an article in Bangladesh-based Daily Star, the deal was inked prior to a spate of sops that were extended to the Adani Power facility in Godda, Jharkhand which conferred it with SEZ status, exempting it from import duty on coal as well as GST as well as duty surcharges.
Bangladesh government may sever the deal since the changes in costs to Adani Power changed after the deal was signed. If the changes were not notified to BPDP, the deal may stand null and void, according to the Daily Star.
Will Indian govt intervene?
While it is unclear that the Indian government may intervene in this direct deal between the Adani Grouo and Bangladesh government, India’s power ministry is likely to have issued an internal note allowing the connection of the Godda power plant to the national grid, paving the way for domestic supply of power from the Adani Group facility, Reuters reported, citing an internal memo.
The move is likely to be aimed at hedging against political risks in Bangladesh, the newswire reported. The change is expected to boost the overall power supply in India and cater to its soaring demand, Reuters reported, citing the Adani Group.
Adani Group may face challenges to its agreement for the supply of power from its Godda plant to Bangladesh after the change of government in the neighbouring country. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
