Bangladesh’s interim government, headed by Nobel Laureate Muhammad Yunus has now accused billionaire Gautam Adani-led Adani Power of withholding tax benefits that the company received from the Indian government, according to Reuters. The neighbouring country is mulling to reconsider the agreement, which reportedly was signed under the previous Bangladesh government without proper tender process and put additional financial pressure than other power deals.
Meanwhile, Bangladesh’s power minister, Muhammad Fouzul Kabir Khan, reportedly said that the country has sufficient resources to provide electricity to the country. The electricity supplied by Adani Power constitutes around 10 per cent of Bangladesh’s total supply. This has increased a shadow of uncertainty around the future of Adani Power’s Godda plant in Jharkhand that was set up solely to supply electricity to the neighbouring country.
Adani Power's SEZ Tax Benefits
The power purchase agreement was signed in 2017. Later Adani Power had said that the deal helped in strengthening India’s relations with Bangladesh. Consequently, in 2019, the Indian government approved a Rs 14,000-crore special economic zone (SEZ) project of Adani Power in Jharkhand.
The SEZs are specially marked areas within a country that have certain economic and commercial benefits compared to the rest of the country. They are mainly craved out by the government to accelerate economic growth of a particular region, and the developers of SEZs gain certain advantages, including duty-waivers, tax exemptions and faster clearances.
The Godda plant also became India’s first standalone power project to get the status of SEZ. Additionally, under the SEZs, the Adani Power plant enjoyed certain direct and indirect tax benefits.
The Bangladesh government, which is already going through financial turmoil fueled by political instability, has now claimed that same tax exemption benefits were not passed on to them. Earlier, Reuters reported that Adani Power has reduced electricity supply by nearly 50 per cent from 1,400 MW to around 700-800 MW due to non-payment of dues. The company also gave November 7 as a deadline to make repayment of debts, which was later withdrawn.
Recently, the Bangladesh high court ordered the government to constitute a high-level inquiry committee to re-examine the power purchase agreement.
