Bangladesh’s interim government is reportedly looking to reopen a multi-billion-dollar agreement with Adani Power, accusing the Gautam Adani-led company of failing to pass on tax benefits related to a crucial power plant in the deal. The dispute has been ongoing since July 2023, with delays in payments to Adani Power, and the two sides are at odds over the total amount owed.
In 2017, Adani Power signed a deal to supply electricity from its coal-fired plant in eastern India to Bangladesh. However, Bangladesh now seeks to renegotiate the agreement, claiming that it is costing more than similar power deals. Bangladesh’s energy minister, Muhammad Fouzul Kabir Khan, stated that the country now has sufficient domestic power generation capacity, though some plants remain unused.
The deal includes tax exemptions, but Bangladesh alleges that Adani Power did not inform them of changes to the plant’s tax status as required by the agreement. As a result, Bangladesh claims it missed out on potential savings, estimated at around $28.6 million. The dispute has intensified with the Bangladesh government attempting to leverage the fallout from a bribery case involving Adani executives, filed by US prosecutors in November. The charges relate to a $265 million bribery scheme, which Bangladesh hopes to use to renegotiate the power deal.
Although the 2017 agreement was awarded by then-Prime Minister Sheikh Hasina without a tender process, Adani Power has not been accused of any wrongdoing in Bangladesh. A spokesperson for the company stated that it had adhered to all contractual obligations and had no indication that Bangladesh was reviewing the deal.
In September, the Bangladesh interim government, led by Nobel laureate Muhammad Yunus, appointed a panel of experts to examine major energy deals signed under Hasina. A separate court has also ordered an investigation into the Adani deal.
Meanwhile, the dispute over payments led Adani Power to reduce its electricity supply to Bangladesh in October. The company cut the power supply from Godda by half due to unpaid dues, which caused frustration in Bangladesh. Adani Power has claimed it is owed $900 million, while the Bangladesh Power Development Board (BPDB) estimates arrears at around $650 million.
The dispute centers around power tariff calculations, with the 2017 agreement pricing energy from Adani’s Godda thermal plant 55% higher than the average cost of Indian power sold to Bangladesh. Bangladesh has requested Adani Power to use alternative benchmarks that would lower the tariff, but the company has rejected this proposal. Further meetings between the two parties are expected soon.
The next steps for Bangladesh depend on the outcome of the court-ordered investigation into the deal. If bribery or irregularities are proven, the country will have to follow the court’s orders, which may include the cancellation of the agreement, according to Muhammad Fouzul Kabir Khan.
