Huge revenue lost for bending customs law in Adani power import

Customs-related irregularities have been detected in power import from India's Adani Group as the legal procedure under Bangladesh's customs has been bent to evade huge taxes.
Bangladesh has been importing costly power from Adani's 1,600MW coal-fired power plants in Jharkhand, India, since April 2022 under duty-free facility without obtaining tax-exemption orders yet, officials said.
No official order or gazette has since been issued by the National Board of Revenue (NBR) exempting import duties in this regard.
Moreover, customs officials have found that no bill of entry (B/E) has so far been submitted to the customs house located in the area where the power -transmission line of Adani crossed the border.
A field analysis by the FE suggests the findings which the customs officials have endorsed too.
Recently, the Adani power entity has requested the interim government to pay its bill arrears against power exports.
Meanwhile, the Ministry of Power, Energy and Mineral Resources has formed an independent body to scrutinise the power deal with Adani following serious allegations raised over the heavily inflated power tariffs for Bangladesh.
Energy Adviser Muhammad Fouzul Kabir Khan has said taskforces have been formed following controversies over power deals with accommodating no officials from the ministry on the committee.
"Not only Adani, the committee would scrutinise other power deals that sparked controversies among the public. We will act on the basis of its (committee) recommendations," he said.
"There is always scope to renegotiate any contracts - be it Adani or any others - if irregularities or corruption evidence are detected," he said.
Mr Kabir, however, said there would be no interference from the energy ministry in such investigations and every deal the committee feels necessary would be scrutinised.
Recently, the Customs Intelligence and Investigation Directorate (CIID) has launched a scrutiny to detect customs-related irregularities over the Adani power deal. The report is expected to be submitted in a month.

Earlier, the customs and power division had exchanged letters to bring the power imports under the legal procedures.
Referring to the tax-exemption order regarding power imports from the NTPC Vidyut Nigam Ltd, the power division on August 14 in 2022 sent a letter to the NBR Chairman to issue a similar order allowing duty-free import of power from Adani Power.
Based on the order, the BPDB is importing 750MW power from PTC India Ltd, Sembcorp India and NTPC Vidyut Nigam under the separate Power Purchase Agreements (PPAs) without paying duties and taxes.
Later, on March 2, 2023, the NBR replied to the Power Division, seeking necessary documents issued by the customs against exemption in the agreement's section 12.1.
"We have reviewed the tax -exemption application of Adani and need legal vetting documents of the NBR before signing the agreement offering tax breaks," wrote Md Al Amin, the then second secretary of Customs Exemption and Project Benefit wing.
A similar letter was sent on March 22, 2023 and April 13, 2023 requesting urgent reply to proceed further on issuance of tax-waiver gazette. However, the letters have yet to receive the necessary response.
As per customs law, all import-export of goods and services, including taxable and tax-exempted ones, must go through a customs procedure. Any tax exemption in a contract or agreement must have NBR's vetting to approve.
Power Secretary Habibur Rahman says he is not aware of any such letter. "We have to find out whether such communications took place earlier."
A senior member of customs says the customs officials hardly dare question the legality of the power import considering its sensitivity.
Though any exemption of duties and taxes needs the NBR's written order or gazette notification, the contract with Adani has been signed offering tax breaks defying the law.
The CIID Director-General, Md Fakhrul Alam, has said the customs intelligence team did not find any B/E on power imports in the Asycuda system.
"We have found one exemption order issued in 2014 for import of power up to 250 MWs in a specific case from India," he added.
The importer, Bangladesh Power Development Board (BPDB), is responsible for submitting the B/E.
BPDB Chairman Md Rezaul Karim, however, explains that it is difficult to submit the B/E as power is not a product to bring in a container and declare it to the customs.
"We have informed the NBR from time to time about the imports of power from Adani," he says.
A senior customs official says that as per the customs law, any exemption on duties and taxes requires legal vetting by the customs authority, and also needed a Statutory Regulatory Order (SRO) to validate it.
"We haven't issued such orders yet. We hardly dare to take action in this regard considering bilateral deals by two heads of governments," he added.
Any transmission line crossing over a customs jurisdiction is supposed to submit necessary documents at that zone, he said.
It is a responsibility of customs officials concerned at that customs point too, he added.
Customs officials have said they had to keep mum knowing the fact that no tax exemption would be applicable without having relevant orders or a gazette notification.
Officials estimated around Tk 30 billion in taxes could have been mobilised so far if the government collected duties and taxes from the power -import deal with Adani.
The special indemnity law 2010 has been followed to import power from Adani to offer it an incompetitive contract, ignoring the country's Public Procurement Rules (PPR).
Customs officials say that neither the government sought their approval nor any official gazette notification was issued so far.
Adani also sent letters to the immediate-past government on June 8, 2022, requesting exemption of duties and taxes on its power exports.
The then government signed the PPA with Adani in 2017.
The Adani Godda coal-fired power plant is a costly source of power for Bangladesh, says IEEFA, an institute that examines energy markets, trends, and policy issues.
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