Bangladesh Aims To Slash Adani Power Prices Amid Ongoing Legal Challenges

Bangladesh is pushing to significantly lower power prices under a 25-year agreement with India's Adani Group unless it is cancelled by a court. This comes as the deal faces scrutiny from the country's High Court and global allegations against Adani founder Gautam Adani.

High Court Orders Investigation

The High Court of Bangladesh recently mandated an expert committee to investigate the power purchase agreement that was signed in 2017 with Adani Group. The deal involves electricity supply from a $2 billion coal power plant in Jharkhand, India. The investigation was prompted by concerns over high costs and a legal request to cancel the agreement. The investigation is expected to be completed by February 2024.
The agreement, which was originally signed under the administration of former Prime Minister Sheikh Hasina, has been criticized for its financial burden on Bangladesh. The 1600 W mega plant supplies approximately 10% of the country's electricity needs, using imported coal, which is an expensive energy source that adds to the overall costs.

Rising Costs For Bangladesh

Adani's power prices have drawn significant attention. As stated in a Reuters report, in FY 2022-23, the company charged 14.02 taka per unit, substantially higher than the national average of 8.77 taka, according to the state-run Bangladesh Power Development Board. While this rate fell to 12 taka in FY 2023-24, it remains 27% above prices charged by other private Indian producers and up to 63% higher than rates from Indian state-owned plants.
This disparity has led to increased pressure on Bangladesh's government, which subsidizes power costs to ensure affordability for consumers. With the retail electricity price at 8.95 taka per unit, subsidies now total 320 billion taka annually.

Interim Government's Probes

Bangladesh's interim government has formed a separate committee to review the Adani deal and six other power contracts to ensure these agreements stand up to international scrutiny and potential arbitration, as quoted in Bangladesh Govt Statements.
While the allegations of corruption in the U.S. against Gautam Adani do not directly affect this deal, they add to the controversies surrounding his business practices.

Supply Disruptions

Adani recently halved its power supply to Bangladesh due to delayed payments. Despite this, Bangladesh's energy needs were unaffected. Many plants remain idle or operate below capacity due to gas shortages or operational challenges.
Bangladesh's de facto energy advisor, Muhammad Fouzul Kabir Khan, has made it clear the country will not tolerate any attempts to leverage supply cuts for negotiation. "We will not allow any power producer to blackmail us," he stated. Khan was quoted by Reuters.