Bangladesh is reportedly looking to renegotiate the terms of its power deal with Adani Power, signed in 2017 under the government of the ousted Prime Minister Sheikh Hasina, reported Reuters on December 1. The Adani electric supply accounts for nearly 10 per cent of Bangladesh's total supply.
A business tycoon marred with controversies and a country struggling to steer its way out of a crisis under an interim government led by Nobel laureate Muhammad Yunus find themselves in a rather strange situation, albeit because of different reasons.
For India’s second richest man Gautam Adani, a series of allegations and protests on both domestic and international fronts have been raising challenges. The US indictment in November 2024 is the latest in a series of overseas hurdles faced by the Indian tycoon. Since 2017, the Adani Group has been under fire in several countries like Australia, Myanmar, Kenya and Bangladesh. The allegations span from stock manipulation, corporate fraud, rights violations and bribery accusations.
For Bangladesh, on the other hand, a snowballing economic crisis marked by high inflation, high debt risk and a slowdown in GDP growth led to the ouster of its former Prime Minister Sheikh Hasina, who had to leave the country in haste amid violent protests after being in power for 15 years.
The global energy crisis triggered by the Ukraine-Russia war made things worse for Bangladesh, a country dependent on fuel imports for meeting its power requirements. According to a report, Bangladesh lacks enough hydrocarbon reserves to power its fossil fuel-fired plants, making it dependent on import fuels such as liquefied natural gas and coal. The high capacity charge of these plants became a burden for a country struggling with global and domestic issues.
The Power Conundrum
At the heart of the controversy is the $2-billion Godda Ultra SuperCritical Thermal Power Plant (USCTPP) located in Jharkhand in eastern India. Commissioned in November 2017, Adani Power entered into a 25-year power purchase agreement (PPA) with the Bangladesh Power Development Board (BPDP) to supply 1,496 MW of electricity from the Godda plant. The Adani firm started supplying power to Bangladesh in April 2023. Pricing was a contentious issue right from the beginning. By February 2023, the Bangladesh Power Development Board had written to Adani Power seeking revision of the price.
However, once the Hasina government collapsed in August 2024, several energy deals came under scrutiny. Miffed by delayed payments, Adani Power in October 2024 was forced to reduce supply.
According to Mint, Bangladesh owes Adani approximately $650 million, according to BPDB. While Dhaka paid $85 million in November and $97 million in October, Adani sources claim the total dues have now climbed to around $900 million. This has strained the company’s financials, potentially raising borrowing costs.
With Bangladesh slashing its electricity imports from India’s Adani Power by half, citing reduced winter demand and unresolved payment issues, future negotiations are expected to be tricky, especially as India’s neighbour is likely to push for lower energy prices. A special committee was also formed, under the instructions of the high court, in November in Bangladesh to review all energy deals between the Adani Group and the Hasina regime.
For a country grappling with multiple economic crises, such a stance is perhaps not surprising but what this means for future energy negotiations between the Adani Group and Bangladesh remains uncertain.
US indictment and its impact
The indictment filed by the US Department of Justice (DOJ) accuses billionaire Adani of orchestrating an “elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars” and making misleading statements to US firms about the firm’s “anti-bribery practices and policies, as well as reports of the bribery probe.”
Although the Adani Group as denied all charges, experts have cautioned that the bribery charges could risk the conglomerate’s business interests overseas, with potential partners being wary of a business tycoon marred with a series of controversies.
