Amid reports of the government seeking the 2017 power purchase agreement (PPA) with Adani Power Ltd to be revised over “pricier” coal, a new report has pictured the fact, saying that Bangladesh wants a discount on the deal.
The power company owned by Gautam Adani on February 3 wrote to the Securities and Exchange Board of India about the matter, which was made public by stock exchanges on Tuesday, The Washington Post reported later in the day.
In the letter, Adani Power told the Indian regulator that Bangladesh was "requesting us to consider a discount" on the lucrative power deal.
The PPA was signed between Bangladesh Power Development Board (BPDB) and Adani Power (Jharkhand) Limited to import 1496 MW (Net) from its 1600 MW coal-fired power plant at Godda of Jharkhand state on November 5, 2017.
The annual requirement of coal for the plant is estimated to be 7-9 million tonnes.
Previous media reports suggested that the “high coal price” to be purchased for the Adani plant emerged as the key factor.
Adani Power recently sent a request for BPDB to issue the demand note, where the coal price is quoted at $400 per metric ton -- far above what BPDB officials believe it should be given the present state of the international market.
“In our view, the coal price they have quoted ($400/MT) is excessive - it should be less than $250/MT, which is what we are paying for the imported coal at our other thermal power plants,” a BPDB official said recently.
The Post in December reported that under the 163-page PPA, Dhaka would pay high prices for electricity from a new coal-fired power plant built by Adani, a longtime ally of Indian Prime Minister Narendra Modi, that exceeded prices paid to comparable power plants.
Furthermore, the deal also included the absence of a price ceiling on coal, allowing Adani to charge Bangladesh an even steeper price as he is likely to import coal for the power plant from his overseas coal mines via his shipping network and coal-handling ports, The Washington Post reported in December last year.
According to the Post, officials from Dhaka have expressed unease about the deal with Adani and have hoped for renegotiated terms.
But in its letter to Indian regulators this week, Adani Power said the PPA is not being renegotiated. Varsha Chainani, an Adani spokeswoman, declined The Post's request for further comment.
However, an Adani Power spokesperson told a Bangladeshi daily that the BPDB sought the discount on variable energy costs, on a temporary basis given the current high thermal-sea borne coal prices.
There is no request for revision of the agreement, he claimed nevertheless.
Meanwhile, a BPDB official, seeking anonymity, said it is not possible to make any revision to the PPA
A spokesperson for State Minister for Power, Energy and Mineral Resources Nasrul Hamid also did not immediately respond to a request for comment sought by The Post.
On February 5, Nasrul said that the electricity from Adani Power will come into Bangladesh in the first week of March.
“There is no concern about Adani's electricity import and discussion on Adani's power is baseless,” he said, adding that the electricity will come at a competitive market price.
“There is no doubt about this. 750 MW power will come from the first unit in March. Another 750 MW of power will come from the second unit of Adani's power in April,” he furthered.
The state minister recently told a local daily that the “energy will be purchased as per contract."
India's External Affairs Ministry spokesperson Arindam Bagchi last week described the matter as a deal between a sovereign government and an Indian company. “I don't think we (Indian government) are involved in this,” he said.
