Adani’s coal power will add pressure to hike power tariff in Bangladesh: IEEFA
The original plan was to use cheaper coal mined in India’s Jharkhand, but it was later changed to use Australian coal
The Adani Godda coal-fired power plant, set to start commercial generation on 16 December, will supply very expensive power to Bangladesh and add pressure to hike power tariff, finds a new report by the Institute of Energy and Economic Financial Analysis (IEEFA).
The tariff for power sold from the Godda plant to the Bangladesh Power Development Board (BPDB) will be almost double the initial expectation, reads the report of the Australian think tank released on Tuesday.
Initially, the cost per kilowatt-hour (or a unit) of electricity from the Godda plant was estimated at Tk8.71, but was revised up to Tk15 due to the high cost of coal in the international market and high capacity charges, said a source at the Power Division.
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Simon Nicholas, author of the IEEFA report titled "Carmichael Coal Is Not Reducing Poverty in South Asia", "Coal is being imported from Carmichael [in Queensland, Australia] and railed 700km from port to the Godda power plant in Jharkhand state, India. The full cost of this is being passed on to Bangladesh. Power from Godda will then be exported to Bangladesh, reportedly costing almost double the initial expectation at around US$150/megawatt hour (MWh)."
Nicholas said the original plan for Godda was to use coal mined in Jharkhand, but it was later changed to use Carmichael coal.
The BPDB then entered a power purchase agreement that allows Adani to import coal into an Indian coal-mining state from Australia and pass the full cost on to Bangladesh.
"This price is two-and-a-half times the price at which the state-owned utility BPDB sells power to distributors," said Nicholas.
"The huge gap in price at which the BPDB buys and sells power has to be covered by government subsidies that are becoming increasingly unaffordable and which will lead to the need to increase power tariffs significantly to transfer the burden onto consumers.
"This process has already started. In November 2022, the tariff at which the BPDB sells power to distributors was increased 20% and the power distribution companies are now submitting proposals to increase retail tariffs by the same amount."
The IEEFA said, "The growing burden of fossil fuel imports has been putting Bangladesh's power system under growing financial strain for years and IEEFA has been warning that this will lead to the need for higher power tariffs."
The report said, "Bangladesh will need to focus more on renewable energy going forward if it wants to limit the burden of fossil fuel imports and increase energy security."
