Touch Adani and face severe consequences; Bangladesh will act decisively

The interim government, led by Muhammad Yunus, avoided drastic measures, fearing that canceling the contract could plunge Bangladesh’s power sector into crisis.

Bangladesh is expected to maintain its power deal with the Adani Group despite recent signals that the agreement may come under review after Adani was asked to settle dues through electricity supplies. The interim government, led by Muhammad Yunus, chose not to take drastic measures, recognizing that canceling the contract could severely impact Bangladesh’s power sector, as Adani currently provides 10% of the country’s electricity needs. Additionally, the government is cautious about facing an unfavorable ruling from the International Court of Justice if the Adani Group were to challenge the cancellation.

The government is also mindful of the strategic importance of maintaining stable energy supplies amid increasing demand. With Bangladesh’s economy continuing to grow, disruptions in power generation could result in widespread economic challenges. Therefore, instead of outright cancellation, the government has opted for a more cautious approach. A committee has been appointed to carefully scrutinize the terms of the deal, assess whether the electricity pricing is fair, and investigate the specifics of the contract, including conditions related to supply and pricing mechanisms. This thorough review, aimed at ensuring the best course of action without jeopardizing the country’s energy security, should reassure the public of the government’s careful consideration of the energy deal.

The Adani Group has stated that it has yet to receive an indication from Bangladesh about renegotiating its existing power deal. Despite significant arrears, the company has reaffirmed its commitment to continue supplying electricity. Currently, the Bangladesh government owes Adani around six thousand crore rupees in outstanding payments, but the group remains focused on fulfilling its obligations under the agreement. This commitment from the Adani Group should instill a sense of reliability in the audience, assuring them of the continuity of the energy supply.

In November 2017, Adani Power (Jharkhand) Limited (APJL) signed a 25-year power sale agreement with the Bangladesh Power Development Board (BPDB) for the supply of 1,496 MW of electricity. The terms of the agreement stipulate that Bangladesh will purchase 100% of the electricity generated by APJL’s Godda power plant in Jharkhand, highlighting the country’s reliance on this significant energy source. This long-term contract, designed to support Bangladesh’s growing electricity needs, should instill optimism in the audience about the country’s stable power supply over the next two decades.

In the fiscal year 2023-24, approximately 7,508 million units of electricity were exported from the Godda plant to Bangladesh, underscoring the plant’s critical role in powering the nation. The continuity of this energy supply is crucial for Bangladesh, particularly as it seeks to manage its rising energy demand and prevent disruptions in its power infrastructure. Despite financial challenges, the deal remains pivotal to both parties, with the government exploring ways to address arrears without jeopardizing its energy security.

According to the Bangladesh Power Development Board’s annual report, the average cost of electricity imported by Bangladesh from Indian companies during 2022-23 (July) was 8.77 Bangladeshi Taka per unit, though rates vary by company. For instance, NVVL Limited charged between 4.22 and 8.45 Taka per unit, while PTC India Limited’s rate was 9.05 Taka per unit. Semcorp Energy India charged 9.995 Taka per unit. However, the Adani Group’s electricity came at a significantly higher cost of 14.02 Taka per unit, raising concerns about the disparity in pricing.

This steep pricing has sparked protests in Bangladesh as public dissatisfaction grows over the decision to buy electricity from the Adani Group at a higher rate than other Indian suppliers. Critics argue that the deal could be more economically viable for Bangladesh, especially when more affordable options are available. These concerns are adding pressure on the government to reconsider the terms of its agreement with Adani as the country grapples with balancing energy needs and financial prudence.

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