Bangladesh's interim government has accused Indian energy supplier Adani Power of violating a multi-billion-dollar agreement by withholding tax benefits related to its coal-fired plant in Godda, India. This accusation comes amid a growing dispute over power supply costs and payments, with the Bangladesh Power Development Board (BPDB) seeking renegotiations of the deal signed in 2017. According to documents seen by Reuters, the deal, which was negotiated without a competitive tender process, has resulted in higher energy costs for Bangladesh compared to other coal power contracts.
The agreement, signed by Adani Power under the direction of Indian billionaire Gautam Adani, provided for the supply of electricity to Bangladesh from the Godda plant. However, Bangladesh has raised concerns about its financial terms, especially after Dhaka fell behind on payments starting in July 2023. While the two sides disagree on the exact size of the outstanding bill, Bangladesh reportedly owes several hundred million dollars for energy already supplied, according to Reuters.
One of the key issues centers on the tax benefits that the plant was supposed to pass on to Bangladesh, as outlined in the contract. Adani Power, according to the BPDB's letters sent in September and October 2024, failed to pass on the "benefit of a tax exemption" granted by India's government to the Bangladesh power supplier. These tax exemptions were expected to reduce power costs for Bangladesh, potentially saving the country about $28.6 million based on the 8.16 billion units supplied in the last year. However, Adani Power has not responded to these concerns, as reported by Reuters.
The Bangladesh government, now led by Nobel laureate Muhammad Yunus after a student-led revolution ousted former Prime Minister Sheikh Hasina, is seeking to revisit the terms of this deal, which it views as hastily negotiated without adequate scrutiny. Bangladesh has already taken steps to address such deals by scrapping a 2010 law that allowed Hasina to award energy contracts without competitive bidding.
Adani Power, in response, has denied any wrongdoing, stating that it has upheld all contractual obligations and refuting allegations related to the withholding of tax benefits. The company has also disputed the figures for arrears, with both parties locking horns over how energy tariffs should be calculated. Tensions escalated in October when Adani Power halved the energy supply to Bangladesh in response to the ongoing payment dispute, according to Reuters.
The dispute is now expected to be further scrutinized, with a court-ordered investigation into the deal's legitimacy and possible political interference. The outcome of this investigation could significantly impact Bangladesh's next steps, including the potential cancellation of the contract.
Bangladesh's power minister, Muhammad Fouzul Kabir Khan, has indicated that the country now has sufficient domestic capacity to meet its power needs without reliance on Adani's supply, though not all domestic power plants are fully operational.