Adani Power team likely to visit Bangladesh to discuss coal price, power tariff

A high level team of the Indian Adani Group is likely to come to Bangladesh within this month to discuss the coal price and power tariff issue, said a highly placed source at the Bangladesh Power Development Board (BPDB).

“We’ve been communicated by the Adani Group that a team of the company is coming to Bangladesh within February”, he told UNB on condition of anonymity.

According to official sources, the move from the Indian conglomerate came in response to BPDB’s letter sent recently to the Adani Group following a request 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.

Since practically all the power generated by the plant located in the Godda district of Jharkhand state will be exported to Bangladesh, Adani Power requires a demand note from BPDB that it can present to Indian authorities before opening LCs against the coal import.

Adani Power recently sent a request for BPDB to issue the demand note, where the coal price is quoted at $400 per 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," the BPDB official said.

The same sources also said Bangladesh’s stance on the issue was communicated to Adani Power officials during the visit of a delegation led by State Minister for Power, Energy and Mineral Resources Nasrul Hamid to the site of the power plant in the first week of January.

Meanwhile, the State Minister on Sunday said that electricity from India Adani Group's Jharkhand power plant will be added to the national grid in March as per the agreement.

"There is no uncertainty over supply of electricity from Adani Power to the national grid,” he told reporters at his office on Sunday.

The junior minister's remarks came against the backdrop of a UNB report that state-owned BPDB sought a revision into the power purchase agreement (PPA) signed with Adani Group.

He said the tariff of Adani's power will be competitive compared with other coal-fired plants like Payra power plant.

"The tariff of Adani power will not be more than the tariff of power from the Payra plant," he said.

He also said about 750 MW will be added to the national grid in March and another 750 MW from April this year.

A number of BPDB officials told UNB the Adani’s power tariff might be between Tk 20-22 per kilowatt hour (each unit) because of the absence of a provision for discounts on the purchase of coal in the PPA signed with Adani Power, that allowed the Indian firm to quote such a steep bill for the coal.

The absence of such a provision is all the more notable since it was made mandatory in the PPAs for thermal power plants signed with other independent power producers, domestic or foreign. In these PPAs, the price of coal to be purchased as primary fuel was kept as “pass-through”.

The PPA with Adani Power was signed in November 2017, in Dhaka. Then-Power Division Joint Secretary Faizul Amin, BPDB secretary at the time Mina Masuduzzaman and Adani’s Business Development President Kandarp Patel signed two documents - the PPA and an Implementing Agreement - on behalf of their respective sides.

Officials said that they have been working on a number of alternatives to offer Adani so that its coal price could be reduced to ultimately lower the power tariff.

" If the Adani’s power tariff is not competitive, it would be difficult for BPDB to keep it on the merit list to take its electricity for the national grid”, said another top BPDB official.

Source: United News of Bangladesh