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Bangladesh’s interim government is reportedly hoping to renegotiate a 2017 multi-billion-dollar agreement with Adani to provide power from its coal-fired plant in eastern India. The deal was awarded by then-Prime Minister Sheikh Hasina without a tender process, costing Bangladesh far more than its other coal power plants. The interim government has accused Adani Power of breaching the agreement by withholding tax benefits that a power plant central to the deal received from New Delhi.
According to a report in Reuters, Dhaka owes several million dollars for energy that has already been supplied. However, both sides are disputing the exact size of the bill. Bangladesh power minister Muhammad Fouzul Kabir Khan said that the country now had enough domestic capacity to cope without the Adani supply.
As per the report, Bangladesh plans to reopen the 25-year deal and hopes to leverage the fallout of the US indictment in a $265 million bribery scheme to press for a resolution. Adani Group had denied the charges and called them baseless. A spokesperson for Adani Power said that all contractual obligations were upheld by them and that they had no indication about Bangladesh reviewing the contract.
Delhi had declared Adani Power’s Godda plant that runs off imported coal and was built to serve Bangladesh as part of a special economic zone. Under this, it enjoyed incentives such as exemptions on income tax and other levies. The power supply was required to inform Bangladesh of the changes in the plant’s tax status and pass on the benefit of the tax exemption from Indian government, according to the contract signed between Adani Power and the state-run Bangladesh Power Development Board (BPDB) in 2017.
However, the company did not do so, as per the letters by BPDB, urging it to remit the benefits. BPDB officials told the news agency that they never received a response from the company. Bangladesh is anticipating potential savings of about $28.
6 million. Meanwhile, on October 31, Adani Power reduced the power supply from its Godda plant by half, citing the payment dispute with Bangladesh based on the calculation of power tariffs. As per Reuers, Adani Power declined a request from the BPDB to extend a discount that had been offered until May.
This discount resulted in savings of approximately $13 million for Bangladesh. Adani Power stated that it would not consider any further discounts until the payment issue was resolved. Adani Power claims it is owed $900 million, whereas the BPDB estimates the arrears to be around $650 million.
The reduction in power supply has particularly frustrated Bangladesh. BPDB Chair Md Rezaul Karim expressed anger as the move followed Dhaka's remittance of $97 million to Adani Power in October, marking the highest monthly payment made this year..
