Adani charging an extra Tk 50–60b a year

Power purchase agreements signed under the Special Powers Act need to be revised as the contracts that are causing excessive financial bleeding.

The Adani power deal is the worst. Starting with this one could strengthen the state’s bargaining power with others.

These views were expressed yesterday, Sunday, at a press conference held at the Biddut Bhaban by the National Committee for Reviewing Power Contracts, formed by the interim government.

The committee submitted its final report on 20 January to the Adviser for Power, Energy and Mineral Resources after reviewing power contracts signed during the previous government’s tenure.

The report states that if Adani’s power plant suffers losses due to any internal reasons within India, Bangladesh would have to bear the liability under the contract. When the price of imported electricity from India stood at 4.46 cents per unit, Bangladesh signed a contract with Adani at 8.61 cents per unit.

The pricing mechanism in the contract is described as bizarre, resulting in Bangladesh paying Adani 40–50 per cent more per unit of electricity.

As a result, Adani is extracting an additional $400–500 million annually—equivalent to Tk 50–60 billion. Over the 25-year contract period, this excess payment would amount to nearly $10 billion.

At the press conference held to publish the report, committee members said a substantial amount of documentary evidence regarding Adani had been obtained. Such a contract, they said, could only have been signed through corruption. They recommended formally informing Adani of the corruption findings, seeking its response, and then promptly deciding on arbitration proceedings in Singapore related to the contract. Any delay, they warned, could weaken the case on legal grounds.

Committee member Moshtaq Hossain Khan said the available evidence could justify cancelling the Adani contract and seeking compensation, though this would require a political decision. He added that the interim government may not be able to do so at the end of its tenure, but an elected political government could. Commitments on this issue should be secured before the election. He also said a fraud case could be filed against Adani.

However, Moshtaq Hossain stressed that cancelling the contract would require the people of the country to unite and accept short-term sacrifices. He warned that Adani might stop supplying electricity in the short term, leading to load shedding. But to escape what he called a “25-year curse,” people would have to endure this hardship. Regardless of which government comes to power, public unity would be essential.

The press conference also revealed that the Power Division has hired a UK-based legal advisory firm specialising in corruption cases. The firm is verifying the information gathered on the Adani power plant. The findings have also been shared with the Anti-Corruption Commission, and reports related to Adani have been submitted to the High Court. According to the committee, neutral experts unanimously agree that the contract could not have been signed without corruption. However, without concrete proof of corruption, a sovereign contract cannot be annulled.

The national committee described Adani’s power plant under the heading: “Power produced abroad, risk borne by Bangladesh.” Irregularities were identified in three areas—site selection, pricing, and contractual conditions. The report notes that Cox’s Bazar’s Maheshkhali and India’s Godda in Jharkhand were initially under consideration for the plant. However, there is no explanation in official documents as to why Godda was ultimately chosen. Coal from Jharkhand cannot be exported, yet the plant was set up there using imported coal.

The interim government formed the committee on 5 September, 2024, to review contracts signed under the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010. 

The special law was repealed in November that year. The committee’s report analyses both the contracts and the processes under which they were signed.

The committee is headed by retired High Court Division Justice Moinul Islam Chowdhury. Other members include BUET professor and pro-vice chancellor Abdul Hasib Chowdhury; former KPMG Bangladesh COO Ali Ashfaq; former World Bank chief economist for Bangladesh Zahid Hossain; University of London economics professor Moshtaq Hossain Khan; and senior Supreme Court lawyer Shahdeen Malik.

Responding to questions about delays in submitting the report, Justice Moinul Islam Chowdhury said there was no lack of sincerity. The contracts were highly technical, which required time. Two reports were prepared—one focusing on Adani, and another reviewing all contracts.

In his opening remarks, Justice Chowdhury said the power sector’s high profit potential had increased incentives for collusion, corruption, and political control over contract awards. Excessive pricing, he said, was not incidental but structurally embedded in the contract design.

All committee members except Shahdeen Malik attended the press conference. Zahid Hossain and Moshtaq Hossain Khan presented a summary of the findings.

In an immediate written response to Prothom Alo, Adani Group said it had not received the committee’s report and that no Bangladeshi authority had contacted the company for its views or information. Despite large outstanding dues, Adani claimed it had not stopped supplying electricity.

According to the report, power generation capacity increased fivefold over the past decade and a half, while payments to private power plants increased elevenfold. As a result, the Bangladesh Power Development Board (BPDB) is heading toward insolvency. 

BPDB’s losses stood at Tk 55 billion in 2015 but exceeded Tk 500 billion last year. Without reforms, the crisis will become permanent, with losses and subsidies continuing to rise—ultimately burdening the public.

The committee found that between 7,700 and 9,500 megawatts of capacity remains unused. Annual capacity payments for idle plants range between $900 million and $1.5 billion.

The report describes the contracts as guaranteeing profits for private companies while shifting risks to society. Contracts ensure rent payments for 20–25 years. If fuel prices rise, the government pays; if the dollar strengthens, the government pays; even if electricity is not used, the government pays capacity charges. These contracts prioritised the interests of a narrow group over national interests. 

The committee warned that enduring two to four years of hardship could free the country from this burden, but continuing on the current path would eventually sink the economy. To merely keep BPDB afloat, electricity prices would need to rise by 86 percent—an increase that would cripple industries and ordinary people alike.

The government is purchasing electricity at abnormally high prices—40–50 per cent higher from furnace-oil plants, 45 per cent higher from gas-based plants, and 70–80 per cent higher in the solar sector. 

These are not market prices but outcomes of contract structures. Under the guise of emergency laws, the contracting process during the previous government evolved into a form of state capture favouring vested interests.

Through sovereign guarantees and international arbitration protections, both domestic and foreign businesses benefited. Among coal-based plants, S Alam Group’s SS Power plant is the most expensive. Reliance’s project—relocating an idle or abandoned Indian power plant to Bangladesh—was also deemed questionable. The company later built a plant in Meghnaghat.

Summit’s Barishal furnace-oil plant is comparatively more expensive than similar facilities. In recent years, Summit’s Meghnaghat-2 gas-based plant has had double the per-unit production cost compared to other gas-based plants.

In a written response yesterday, Summit said its power plants were contracted at the lowest tariffs available at the time and that they remain among the most efficient plants according to BPDB listings. The Meghnaghat-2 plant was built using international financing while meeting all required standards. Gas supply disruptions over the past five years, it added, affected operations nationwide.

The committee stated that the contracts were executed under direct instructions from then prime minister Sheikh Hasina’s office, with direct involvement from then state minister for power Nasrul Hamid. While no evidence was found regarding the prime minister’s personal bank accounts, transaction records involving millions of dollars were found in the accounts of several senior officials linked to the contracts. The core objective of these deals, the report concludes, was to sacrifice national interest to secure profits for a specific vested group.