Bangladesh likely to keep power deal with India's Adani: Report

Bangladesh is likely to set aside pricing concerns and retain a power purchase pact with India's Adani Power in the face of supply worries and gloomy prospects for a legal challenge, reports Reuters.

Mentioning two sources with "direct knowledge of the matter", the report says 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.

The Reuters report, citing a source, notes that a legal challenge in an international court would likely fail without solid evidence of wrongdoing.

Another source suggests that, while an exit may not be feasible, the only viable option could be negotiating a mutual agreement to lower the tariff. 

Muhammad Fouzul Kabir Khan, the power and energy adviser, told Reuters, "The committee is currently reviewing the matter, and it would be premature to comment."

The Adani power costs Bangladesh about Tk12 ($0.1008) a unit, an official of the Bangladesh Power Development Board told Reuters, citing the latest audit report for FY24.

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.

Adani has had "no indication" that Bangladesh is reviewing the agreement, a spokesperson in India told Reuters.

"We continue to supply power to Bangladesh despite mounting dues, which are of significant concern and are rendering plant operations unsustainable," the spokesperson said.

Dhaka is struggling to clear dues of $800 million to Adani Power, among more than $1 billion owed to Indian power companies, because of difficulty in accessing dollars to make payment.

"We are in constant dialogue with senior officials of the Bangladesh Power Development Board and the government, who have assured us our dues will be cleared soon," the Adani spokesperson added.

Adani Power was confident Dhaka would fulfill its commitments, just as the company had met its contract terms, the spokesperson added, but did not respond to a query on why its rates exceeded those of other suppliers, the report reads.

According to Reuters, domestic critics in Bangladesh, such as the BNP, say pricing concerns make a review of the deal necessary.

"The deal with Adani has raised serious concerns about overpricing from the start, and it's a positive step that the government is now reviewing it," senior BNP leader Zainul Abdin Farroque told Reuters.

"I hope they make the right decision."

The interim government led by Nobel laureate Muhammad Yunus took power in Bangladesh in August after deadly protests prompted then Prime Minister Sheikh Hasina to resign and flee to neighbouring India.

It has since scrapped projects such as a floating LNG terminal planned by domestic conglomerate Summit Group, with officials saying more cancellations are possible.