Adani puts the squeeze on government

FE Team | Published: November 02, 2024 19:35:58

Indian business conglomerate Adani reportedly shut down one out of two power units in Jharkhand that supply power to Bangladesh from zero hours of Friday, claiming overdue payments totalling US$846 million. It has also threatened to shut down the remaining unit if the Bangladesh Power Development Board (BPDB) did not clear the dues by November 07. The Adani has nearly halved the electricity supply to Bangladesh since the interim government had come to power in August. The BPDB has stated that its request for revision of the "overrated" deal has been ignored by its Indian counterpart; the situation is more complicated than meets the eye. That Adani Power Jharkhand Ltd. (APJL) switched off the supply of 750 megawatts (MW) of electricity supply to Bangladesh demonstrates its determination to use strong-arm tactics with the Bangladeshi government. While the blame game continues between BPDB and APJL, energy experts have pointed out that the power deal is seriously skewed towards the benefit of Adani and to the detriment of Bangladesh.
Originally, APJL had promised to produce power based on coal prices lower than the price of coal used to fire up the Payra and Rampal power plants. Sadly, today, APJL is demanding a 22 per cent price hike. The price hike and consequent dispute over the price per unit charged to Bangladesh have been going on for a year without any remedy, largely because the Indian company isn't interested in anything Bangladeshi authorities have to say.
APJL has decided to take the high road. Today, around 500 MW out of the 750 MW power is being supplied. Bangladesh finds itself in a unique situation. It is suffering from a significant dollar crisis. The Bangladesh Bank governor has recently stated on record that $17 billion has been laundered abroad and that efforts are being made to recover some of the funds. All that will take time. The recent turmoil in the industrial belts has hampered the production and export of readymade apparel; hence, exports are essentially lower than usual. One would have thought that APJL would have shown some flexibility regarding dues and given some slack over dues. But that has not happened. In the spirit of the so-called contract, APJL is within its rights to cut off the power supply. However, Adani taking that road will illustrate that continuing with this contract is not in the country's best interest. Although northern regions of Bangladesh will suffer serious power cuts due to the halting of electricity supply, the alternative is to pay the nearly 1 billion dollars due to APJL on a deal that can, at best, be described as anti-State.
Adani's request for $96 per tonne of coal is ludicrous. The current electricity generated from the coal-fired power plant at Payra in Patuakhali charges $75 per tonne of coal. So, why would Bangladeshi authorities acquiesce to such arm-twisting by Adani? Is it because we need that power? Does that mean APJL can demand whatever it wants? APJL is taking advantage of Bangladesh's current economic problems by making payments across the board. This contract needs to be investigated thoroughly because of the allegations of graft, and if need be, the government should annul it regardless of the hefty penalties that must be paid. Continuation of the contract is akin to submitting sovereignty to a greedy foreign company that will keep making fresh demands with time.