Home / News / World /  Bangladesh govt to review power purchase agreement with Adani Power

Bangladesh Power Development Board (BPDB), the government agency responsible for the development of the Bangladesh's power sector, has asked for a revision of the power purchase agreement (PPA) it signed with Adani Power Ltd for importing electricity from its thermal power plant in Jharkhand, India. The prime reason for the revision is reportedly due to a disagreement over the price of coal to be used as fuel for the project.

This news after the Hindenburg Report makes it clear that Adani is not just stuck with a single front war but battles are spilling at various fronts. It is a major setback amid the ongoing crisis.

According to anonymous sources close to the deal, BPDB has already sent a letter to Adani Group. requesting the opening of Letter of credit (LCs) in India to import the coal. The 1,600 MW plant in Jharkhand is expected to be fueled by the imported coal.

Adani Power needs a demand note from BPDB to present to Indian authorities before importing coal for its thermal power plant located in the Godda district of Jharkhand, since almost all the power generated from the plant will be exported to Bangladesh.

The cost for importing the coal, including transport, will be paid for by Bangladesh. with the price included in the Power Purchase Agreement's tariff. However, Adani Power recently sent a request for BPDB to provide the demand note, with the coal price quoted at $400 per metric ton, which BPDB officials believe is much higher than it should be given the current state of the international market.

“In our view, the coal price they have quoted ($400/MT) is excessive - it should be less than $250/MT, which is what we are paying for the imported coal at our other thermal power plants," the official said as per report from United News of Bangladesh (UNB).

Sources reveal that during the recent visit of a delegation headed by State Minister for Power, Energy and Mineral Resources Nasrul Hamid to the thermal power plant located in Jharkhand's Godda district, Bangladesh's stance on the power purchase agreement with Adani Power was communicated to the Indian company's officials.

However, the state minister publicly made no mention of any disputes during the visit, instead announcing that Bangladesh plans to commence importing 750 MW of power from the plant from March.

The subsequent letter counts as BPDB’s formal request for the PPA to be reviewed and tariff structure to be adjusted before it can start importing the electricity, officials said.

BPDB has raised concerns over a steep bill for the purchase of coal from Adani Power, as the Power Purchase Agreement (PPA) signed with the Indian firm does not contain a provision for discounts.

According to sources familiar with the matter. this absence of such a provision is particularly striking, as it was made mandatory in PPAs signed with other independent power producers, both domestic and foreign. In these agreements, the cost of coal was kept as a "pass-through."

The PPA between BPDB and Adani Power was signed in November 2017 in Dhaka, with the then-Power Division Joint Secretary Faizul Amin, BPDB Secretary Mina Masuduzzaman and Adani’s Business Development President Kandarp Patel signing the PPA and Implementing Agreement on behalf of their respective sides.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Recommended For You
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout