Bangladesh Power Board Seeks Revision to Power Purchase Agreement With Adani Power

The main issue of contention is reportedly the price of coal to be purchased for the project.

New Delhi: The Bangladesh Power Development Board, the country’s power authority, has asked for a revision to the power purchase agreement it had signed with Adani Power Ltd, to import power from the company’s plant in Jharkhand’s Godda district. The BPDB has sent a letter with this request to the company, UNB reported.

The agreement was originally signed in November 2017.

The main issue of contention is reportedly the price of coal to be purchased for the project. “We have sent a letter to the Adani Group following a request we received in relation to opening LCs (in India) to import the coal that will be used as fuel for the 1,600 MW plant in Jharkhand,” a source in the BPDB told UNB.

Almost all the power generated at the plant is meant to be exported to Bangladesh. The cost of the coal, including its transportation, is to be borne by Bangladesh. The price of this coal was to be factored into the power purchase agreement.

According to UNB, Adani Power requires a demand note from BPDB that it can present to Indian authorities before opening LCs against the coal import.

In the demand note Adani Power asked the BPDB to issue, the price of coal was placed at $400 per metric tonne. However, Bangladeshi authorities thought this was too much, given the current state of international markets. “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,” the official told UNB.

The high price is reportedly because there is no discount provision for coal in the power purchase agreement. “The annual requirement of coal for the Godda plant is estimated to be 7-9 million tonnes. But given the omission of a discount provision, Bangladesh will ultimately end up paying Adani Power Tk 20-22 per unit of electricity, once all the hidden costs are piled on top of the tariff,” UNB reported.

“Compare that to the price it pays for the electricity bought from coal-fired plants in Bangladesh, which is below Tk 12 per unit,” the BPDB official said.

If the coal price is not changed, BPDB officials said it would be impossible for Bangladesh to buy power from the Godda plant.