Gautam Adani-led Adani Group’s 1,600 MW Godda plant has come under scrutiny over corruption by the Bangladesh government. Bangladesh’s interim government has said it will not hesitate to cancel its power supply agreement with Adani Group if corruption or irregularities are found in the deal.
The comment comes amid an ongoing review of contracts signed under the Sheikh Hasina-led government. Adani Power and Bangladesh signed a 25-year agreement in 2017 to supply electricity to Bangladesh from its 1,600 MW coal-fired Godda power plant in Jharkhand. The plant currently meets nearly a tenth of Bangladesh’s total power demand.
Adani has not responded to corruption allegations made by the Bangladesh government. However, the threat comes after Adani Power accused the Bangladesh government of payment delays. It is said to have opted for international arbitration to resolve the issue, as per a report of Reuters.
Bangladesh alleges large-scale irregularities
The National Review Committee, led by retired judge Moinul Islam Chowdhury has submitted an interim report alleging corruption in power contracts. The final report is due in January. “The contracts (generally) state that no corruption has occurred, but if proven otherwise, cancellation is possible,” Energy Affairs Adviser Muhammad Fouzul Kabir Khan told local media.
Chowdhury said the team had uncovered “massive governance failure” and “massive corruption” in the power sector, including “gross irregularities” in several quick rental and power purchase deals. “In the course of review of power purchase agreements, we found there was massive corruption, collusion, fraud, irregularities and illegalities,” he said.
Bangladesh could face legal hurdles in scrapping foreign deals
A PTI report said a committee member noted that foreign contracts are legally complex and cannot be scrapped unilaterally without risking heavy penalties. Jurist Shahdeen Malik also cautioned that cancelling such deals could invite international claims of up to $5 billion.
“But we believe, you will get strong evidence of corruption when a legal process begins at home and abroad against Adani and a few other companies related to Adani who are involved in the corruption,” the state-run BSS news agency reported, quoting the unnamed member.
Adani seeks arbitration over payment dispute
“There are disagreements in the way certain cost elements are calculated and billed. Hence, both partners have agreed to invoke the dispute resolution process and are confident of a quick, smooth and mutually beneficial resolution,” an Adani Group spokesperson said in a statement according to Reuters.
Bangladesh’s de-facto power minister Muhammad Fouzul Kabir Khan told Reuters that negotiations are still ongoing. “Once that process is over, we will move toward international arbitration, if needed,” he said.
Tariff concerns add to controversy
The deal has faced criticism for its pricing. During the last fiscal year, Bangladesh paid 14.87 taka per unit for Adani’s power — much higher than the average 9.57 taka it paid to other Indian suppliers, as per the report by Reuters.
Adani Power recently said its dues from Bangladesh had fallen to the equivalent of 15 days of tariff, down from nearly $2 billion earlier this year.