Bangladesh’s interim government is seeking to reopen its multi-billion-dollar power deal with Adani Power, led by billionaire Gautam Adani, following accusations that the company failed to pass on tax benefits related to a critical coal-fired power plant. The country is also exploring potential legal and economic options in light of a bribery scandal that has surfaced in the US, involving Adani and several executives.
The dispute dates back to 2017, when Adani Power entered into an agreement to supply electricity from its Godda thermal power plant in India to Bangladesh. Since the commencement of the supply in July 2023, Bangladesh has faced delays in payments and disputes over the total amount owed, according to documents and sources cited by Reuters.
Bangladesh claims that Adani Power did not inform them of changes to the tax status of the plant, which could have resulted in significant savings. The Bangladesh Power Development Board (BPDB) estimates these savings to be approximately $28.6 million, citing provisions for tax exemptions in the original deal.
US prosecutors indicted Adani and other executives in November for allegedly being involved in a $265 million bribery scheme, escalating the dispute. Bangladesh is now reportedly using this legal fallout to pressure for renegotiating the 25-year agreement, which the then-Prime Minister Sheikh Hasina awarded in 2017 without a tender process.
Although Bangladesh has not accused Adani Power of wrongdoing, a company spokesperson stated that the company has adhered to all contractual obligations and has not received any indication from Dhaka about reviewing the contract. However, in September, the Bangladesh interim government, led by Nobel laureate Muhammad Yunus, appointed a panel to examine major energy deals signed during Hasina’s tenure, including the Adani deal. A separate investigation has also been ordered by a Bangladeshi court.
The payment dispute between the two parties has already led to significant reductions in the power supply. On October 31, Adani Power reportedly halved its supply from Godda, following ongoing payment delays. Bangladesh owes Adani Power approximately $900 million, while BPDB claims the arrears are around $650 million. Bangladesh is struggling with a dollar shortage, making it difficult for the country to secure the necessary foreign currency for payment.
The dispute centers on how power tariffs calculate. The 2017 agreement used an average of two indices, but Bangladesh has been requesting a revision of one index to lower the tariff, which it claims is 55% higher than other Indian power supplies. Adani Power has rejected the request and will meet with BPDB officials soon to discuss the issue.
Bangladesh’s next steps will depend on the results of the court-ordered investigation into the deal. If bribery or irregularities are confirmed, the country could be forced to follow the court’s recommendations, including the potential cancellation of the agreement.
