In light of supply issues and the likelihood of a judicial challenge, Bangladesh is expected to put aside pricing concerns and stick with its power purchase agreement with Adani Power of India, according to people with direct knowledge of the situation.
A commission has been established by the current government to assess whether the contracts signed by its predecessor sufficiently safeguarded the interests of the country, with a focus on projects that were started under a special expediting law but were criticised for their lack of transparency.
A 2017 agreement to purchase electricity for 25 years from Adani’s US $ 2 billion, 1,600 MW power plant in the eastern Indian state of Jharkhand, which only feeds Bangladesh, is one contract under examination due to price concerns.
However, one of the individuals stated that it would be tough to completely cancel the Adani deal because the project provides power to approximately ten per cent of Bangladesh’s needs.
The insider noted that in the absence of substantial proof of misconduct, a legal challenge in an international court was likely to be unsuccessful. The second source stated that while a withdrawal would not be conceivable, a mutual agreement to lower the tariff might be the only workable solution.
The power and energy adviser, or de facto minister in the interim administration, Muhammad Fouzul Kabir Khan, responded, “The committee is currently reviewing the matter, and it would be premature to comment,” when asked about the remarks.
Bangladesh has begun purchasing power from Adani and approximately 1,160 MW of other Indian facilities since April 2023 in accordance with the agreement.
Among the more than US $ 1 billion owed to Indian power companies, Dhaka is having trouble paying Adani Power US $ 800 million in arrears due to its inability to get currencies for the payment.
The country’s ready-made garment (RMG) industry continues to be negatively impacted by frequent power outages. Frequent power outages have increased operational expenses, disrupted production schedules, and made it harder for enterprises to meet export deadlines. Industry leaders have noted that the lack of a consistent power supply poses significant challenges for Bangladesh’s RMG sector, an essential part of the country’s economy that may impact employment and foreign investment.
