Bangladesh likely to keep power deal with Adani

Bangladesh is going to set aside pricing concerns and retain a power purchase pact with India’s Adani Power.

The interim government has set up a panel to gauge whether its predecessor's contracts adequately protected the nation's interests, particularly projects faulted for lack of transparency that were initiated under a special expediting law.

Asked for comment on the remarks, Muhammad Fouzul Kabir Khan, the power and energy adviser, or de facto minister in the interim government, said, “The committee is currently reviewing the matter, and it would be premature to comment.”

The Bangladesh government is doing this in the face of supply worries and gloomy prospects for a legal challenge, two sources with direct knowledge of the matter said.

One contract being scrutinised over price concerns is a 2017 deal to buy electricity for 25 years from Adani's $2-billion, 1,600-MW power plant in India's eastern state of Jharkhand that exclusively supplies Bangladesh.

The project meets nearly a tenth of Bangladesh's demand for power, so cancelling the Adani deal outright would be difficult, however, said one of the sources. Both spoke on condition of anonymity as the matter is a sensitive one.

Also, a legal challenge in an international court was likely to fail without strong evidence of wrongdoing, the source added.

While an exit may not be possible, the only feasible option could be a mutual agreement to reduce the tariff, the second source said.

The Adani power costs Bangladesh about 12 taka ($0.1008) a unit, an official of the Bangladesh Power Development Board said, citing the latest audit report for financial year 2023/24.

That is 27% higher than the rate of India's other private producers and as much as 63% more than Indian state-owned plants, he added.

Under the deal, Bangladesh has been sourcing electricity since April 2023 from Adani, along with about 1,160 MW from other Indian plants.

Source: Reuters