PDB says Adani dues inflated by 32pc
Emran Hossain 12 September, 2024, 23:11
The Bangladesh Power Development Board estimated that it owed to the Indian Adani Power $547 million, about 32 per cent less than what was claimed by the company, a sister concern of the controversial Indian Adani Group conglomerate.
The group’s chairman Gautam Adani sent a letter to chief adviser to the interim government of Bangladesh Muhammad Yunus last month seeking his intervention to clear his outstanding power bill of $800 million, Indian media reported on September 10.
The PDB confirmed that Adani Group asked for payment of $800 million in dues.
Officials at the power development board’s finance division explained that an unequal power purchase agreement that brought Adani into the country’s power scene last year in a deal patronised by Sheikh Hasina and Narendra Modi allowed price manipulation and the overpricing.
Power, energy and mineral resources adviser Muhammad Fouzul Kabir Khan said that a special committee was engaged in evaluating power and energy deals, including the one with Adani, signed during the tenure of the now overthrown Awami League government.
‘We are also writing a reply to the letter sent to the chief adviser explaining our position on the matter,’ he said sharing his knowledge regarding the difference in the estimates of its dues payable to Adani.
The power purchase agreement, better known as PPA, allowed Adani Power to generate electricity in its 1,600MW Godda power plant by burning coal carrying a calorific value of 4,600 kcal/kg, but charge Bangladesh for the use of coal carrying the calorific value of 6,322 kcal/kg.
It means, Bangladesh is being charged by Adani for a high quality coal use, while in reality the plant is using a lesser quality coal.
The price of coal varies greatly depending on its quality, explained officials at the PDB’s finance division, citing different prices of coal on the Indonesian index on Wednesday.
The price of a tonne of coal on the Indonesian index drops down to $51.18 from $127.72 between the categories of the coal producing 4200 kcal/kg and 6500 kcal/kg. The lowest quality of coal on the Indonesian index costs $31.78.
The PPA also allowed Adani to combine prices of coal on the Indonesian and Australian indexes and average them to claim a price from Bangladesh.
The Australian coal is of very high quality and more expensive than the Indonesian coal. Adani is allowed to use the high price to inflate its profit though importing coal from Indonesia entirely.
The provision of averaging the combined prices is rather unique since other similar power plants were never allowed such privileges. Power plants, such as Rampal and Payra, were allowed to use only one index for pricing.
The Adani power plant initially raised eyebrows as it had planned to use coal from an Australian mine owned by the Adani Group. The international media reported that Adani was allowed to dump its coal on Bangladesh as the fossil fuel was rapidly losing its market. Adani had to abandon the plan following widespread criticism.
The PPA, termed unequal by energy experts, allowed Adani to charge 60 per cent higher prices than the actual market price early last year, causing widespread outrage in Bangladesh.
In February, Adani demanded about $400 for each tonne of coal for running its Godda power plant in Jharkhand though the same coal was available for $250.
After the uproar over the coal price amidst a severe dollar crisis plaguing the past Awami League government, Adani agreed in what PDB calls a side letter that the company would charge price for coal keeping up with other coal-based power plants.
The PPA however remained unchanged.
The PPA, which was never made public, also lacked discount provision provided by the 1200MW Payra power plant in case of a sudden increase in the price of energy. The Payra plant gives up to 40 per cent discount.
Globally, PPAs offer the discount benefit, up to 55 per cent, for large-quantity coal purchases, energy experts said.
The effectiveness of the side letter expired in June this year, the PDB said.
Letters sent to Adani requesting an extension of the side letter after the autocratic Hasina government fell in early August was not replied.
PDB officials said that Adani rather insisted that their dues to be paid based on the PPA conditions.
Bangladesh is currently receiving a $4.7 billion loan from the International Monetary Fund based on agreeing to implement at least four dozen conditions.
In April, 2018, in a report the US-based Institute for Energy Economics and Financial Analysis said that the Godda project would be one of the most expensive sources of electricity for Bangladesh.
The report pointed out that Bangladesh’s Godda electricity deal was clearly designed to benefit Adani.
In December 13, 2022, the institute in another report said that Bangladesh could not afford electricity produced by Adani without frequently increasing power tariff.
Ever since Adani rolled into operation last year, power price was increased several times.
The Washington Post showed the Godda project as the centrepiece of a report published in December 2022 for demonstrating how political influence and abuses enabled the Adani Group to build its coal empire in India and beyond.
‘The coal will probably come on Adani ships to an Adani-owned port in eastern India, then arrive at the plant on a stretch of Adani-built rail. The electricity generated will be sent to the border over an Adani-built high-voltage line. Under the contract, shipping and transmission costs will be passed on to Bangladesh,’ read a paragraph of the Washington Post report.
The Institute for Energy Economics and Financial Analysis estimated that the coal shipping would involve an 8,000-km sea and a 700-km railway journeys.
Adani also built over 100-km power transmission lines and is entitled to charge Tk 0.29 per unit with a yearly increase rate of 1 per cent, according to a report published in June by the Bangladesh Working Group on External Debt.
The working group report estimated that Adani would have its investment returned in maximum six years while the capacity charge stipulated in the deal with Bangladesh would earn Adani over its 25-year lifetime some $12 billion.
Adani’s Godda investment was estimated to be $2 billion.
The power cell director Muhammad Hossain last year blamed lack of experience for the shortcomings in the deal with Adani.
Bangladesh’s current installed capacity is 27,791MW, but the country is struggling to generate even 13,000MW.
A crippling energy crisis is sweeping through the country amidst humid, hot days, prompting up to 20 hours of power cuts in many places.
Adani-appointed public relation agency in Bangladesh in reply to a request for comment said that what the BPDB said was correct as overdue amount. Amount remained not paid within two months due date.
It also said that Adani had not officially told any news media about any amount outstanding.
Bangladesh Defense
