Adani Group's rejoinder and our reply

Adani Power issued a rejoinder against a TBS report titled "How questionable Adani deal makes electricity costlier" published on August 20, 2024. Following is the complete text of the rejoinder:

1. Adani's power generation cost was lower than Payra, Rampal and other comparative plants, as per the latest annual report of the Bangladesh Power Development Board published in 2022-23. Adani's power cost 14.02 taka per unit whereas Rampal costs 14.12 taka and Payra costs 16.02 taka per unit, according to the financial year 2022-2023 BPDB report. How could the power be costlier then?

2. In addition, the average cost over the last 15 odd months, including capacity charge, fuel cost, and variable cost, is for Adani Tk 11.89 taka whereas for Payra it is 12 taka and for Rampal 13.57 taka.

3. The TBS report also compared Adani's electricity price with a decade-old price in the Indian energy exchange market whereas anyone in the industry knows that the power price fluctuates frequently and only goes up with time due to inflation, higher raw materials pricing and other reasons.

4. The price of Adani's power is very much aligned with the current Indian exchange market rate. In fact, Adani's power price never goes up suddenly which may be the case in exchange markets. Such unjust comparisons are heinous attempts to defame Adani.

5. It is to be noted that we are providing uninterrupted electricity to Bangladesh as per our commitment at a time when $800m have remained due in payment. For any other company, local or foreign, it is almost impossible to operate with such an outstanding amount.

6. On top of that, Adani built a 245 km transmission line between Bangladesh and India to supply uninterrupted electricity to the Rangpur Rajshahi divisions which is one of its kind.

7. We have debunked this 'Adani price costlier' narrative at length to media outlets before and it is tremendously concerning for us those fresh efforts are being made to spread this mischievous propaganda.

8. As we have said before, we are committed to ensuring that the delivered tariff would either be competitive with peer stations like Payra and Rampal or lower. This is being done because we are aware of the Godda plant's competitiveness.

9. Additionally, Adani Power has not, as a gesture of goodwill on its own, billed for fixed costs when transmission infrastructure to evacuate electricity was delayed on the Bangladesh side. We would take all actions in the interests of the electricity consumers of Bangladesh.

10. We would have reiterated these had The Business Standard contacted us for comment, which is journalistic good practice. We are surprised that a paper of The Business Standard's credibility would not do the basics and due diligence. The article, which is a combination of selective misinformation and concealed facts, was published when the public discourse in Bangladesh was appreciative of Adani's role during the time of the power and dollar crisis.

Our reply:

The rejoinder does not factually contradict any part of our news story. But it tried to establish that Adani's power was not so expensive by citing examples of the high tariff of Rampal and Payra coal power plants.  

The Business Standard's report on Adani clearly mentioned that the costly power from Adani's plant is one of the "many reasons" why Bangladesh is paying significantly higher rates to use electricity in recent years.

The rejoinder claimed that Adani's power tariff ultimately came down to Tk 11.89 per unit after 15 months of operation and this is lower than that of Rampal and Payra power plants.  

The fact is the power tariffs of Rampal and Payra power plants are also questionable and they demand a separate story. But if we dig into how the tariffs of Rampal and Payra became higher, we find that Adani's tariff was lower because its power plant was utilized to maximum potential while Rampal and Payra operated partially.

The generation cost of per unit electricity includes several cost components —---fuel cost, capacity payment and Operation and Maintenance charge. If a plant's load factor or usage of the plant is higher, the generation cost of per unit electricity of that particular plant will be cheaper.

On the other hand, if a plant remains unused or runs at limited capacity, its per unit electricity cost will be higher due to its capacity and operation and maintenance charge.

During the said period, Adani's plant load factor (PLF) or usage of the plant capacity was 90% while Payra and Rampal's PLF was only 60% and 34%. Shortage of coal obstructed Payra and Rampal to generate electricity at highest capacity.

As these plants were not in maximum use, but took the capacity charge as fixed cost, therefore, overall cost of per unit electricity of these plants went up.

We have argued that compared to power purchase cost from the Indian electricity exchange market, the price of Adani's power was way higher. The rejoinder just stated that we compared Adani's tariff to "decade-old" Indian power exchange rate, adding that the price of Adani power is very much aligned with the current Indian exchange market rate.

But we cited official data saying, Bangladesh bought Adani's power for Tk14.02 per kilowatt-hour (or a unit) in 2023. Bangladesh bought another 1,100MW power from India's electricity exchange market at Tk7.83 per unit.

In the first quarter of 2024, the cost of Adani Power's electricity has been costlier than other peer coal power plants in Bangladesh.

Cost of Payra Power plant electricity was Tk12.73 per kWh and the cost of Rampal plant's electricity was Tk11.47 in January, while the cost of Adani's electricity stood at Tk15.

In February, Payra and Rampal power plants' electricity cost was Tk13.80 and Tk13.02 per unit respectively, while Adani Power plant's electricity cost was Tk15.75.

In March, Payra's electricity cost was Tk12.65 per kWh while the cost of Adani Power's was Tk13.92 per unit.

Our report also questioned whether it was necessary to buy Adani's power at such a cost when Bangladesh still had so much surplus power generation capacity. Due to such a bad planning coupled with economic crisis, today Bangladesh has piled up arrears of $800 million with Adani alone.

It was our mistake that we did not contact Adani Power regarding the report. We apologise.