The interim government of Bangladesh has reportedly accused Adani Power of breaching a multi-billion-dollar agreement by withholding tax benefits given to its Godda plant in Jharkhand, which supplies power to the neighbouring country.
A Reuters report on Thursday said the Muhammad Yunus- led government in Bangladesh is looking to renegotiate the power deal.
It cited Bangladesh power agency documents and letters between the two parties which claimed that the contract was awarded by then-Prime Minister Sheikh Hasina without a tender process and costs Bangladesh far more than its other coal power deals.In 2017, Adani Power signed a 25-year deal to supply power to Bangladesh from its 1600mw thermal unit in Jharkhand.
The neighbouring country which has also been affected by foreign exchange shortage owes millions of dollars to Adani Power.
Speaking to analysts after the second quarter results on October 28, Dilip Jha, chief financial officer, Adani Power had disclosed that the receivable is $790 million or ₹6,630 crore.
Recent reports indicate Adani Power has brought down the power supply to Bangladesh due to the dispute over dues. This came even as the latter asked the Indian firm to renegotiate the supply price.
Bangladesh’s power minister Muhammad Fouzul Kabir Khan told Reuters the country now had enough domestic capacity to cope without the Adani supply, though not all domestic power generators were operational.
The report claimed that the power supply contract also came with an additional implementation agreement that addressed the transfer of tax benefits.
In 2019, the Indian government had approved a ₹14,000 SEZ in Jharkhand which housed the plant. This gave the unit incentives like exemptions on income tax and other levies.
The Reuters report said that Adani Power was required to inform Bangladesh swiftly of changes in the plant’s tax status and to pass on the “benefit of a tax exemption”.
But two letters sent by the BPDB in September and October claimed that Adani Power did not do so. It urged the company to remit the benefits.
Two BPDB officials, also told the news agency that they did not receive responses from the Adani group. BPDB estimates savings of roughly 0.35 cents per unit of power if the benefit was passed on.
While there were talk earlier this month that Bangladesh wants to lower prices under the power purchase agreement (PPA), Adani Power had said that there was no indication of the country reconsidering the PPA.
The BPDB had reportedly claimed that at 14.02 taka a unit, Adani Power charged the highest rate for Indian-generated power to Bangladesh in 2022-23 as against an average price of 8.77 taka.
This rate fell to 12 taka per unit in 2023-24, which was still higher than other private producers.
Brand makeover
The Adani group has released a new version of its ‘Hum Karke Dikhate Hai’ campaign as it looks to shake off the allegations made by the US authorities in an alleged bribery case.
