Originally posted in The Business Standard on 28 February 2023
Amid the controversy over an abnormal coal price quoted by Adani Power, Bangladesh is all set to receive electricity from the Indian power company’s Godda 1600MW Thermal Power Plant from the first week of March.
Bangladesh will import around 750MW of electricity from the first unit of the plant to meet electricity demand, which has been on the rise due to growing needs for irrigation and approaching summer time, according to officials at Adani and Bangladesh’s Power Division.
“As per our previous announcement, it is likely to commence electricity import from the Godda plant in the first week of March,” Power Division Secretary Md Habibur Rahman told The Business Standard yesterday.
Asked if a decision on the coal-price mechanism has been reached with Adani representatives, Habibur Rahman declined to comment and asked this reporter to contact the chairman of the Bangladesh Power Development Board (BPDB).
But when contacted over the phone, BPDB Chairman Engineer Md Mahbubur Rahman declined the call.
Meanwhile, an official at Adani Group’s Bangladesh office, told TBS that they have assured the BPDB at a meeting on 23 February that the price of imported coal to generate electricity in the Godda plant will be in line with the cost of coal imported by Payra and Rampal Coal power plants.
According to sources at the Power Division, the Bangladesh-China Power Company Limited, the sponsor company of the Payra 1320MW Thermal Power Plant, gets a 45% discount from the supplier if the high calorific coal price is above $115 per tonne in the international market.
The discount is provided considering various reasons such as the long-term contract of supply, comparatively low-graded coal than the highest specification, sources said.
The current price per tonne of high calorific coal is around $204, according to the Newcastle index.
Therefore, the import cost per tonne of coal for the Payra 1320MW Thermal plant stands at around $112, said sources at the Bangladesh-China Power Company.
However, the cost of coal imported for Adani’s Godda 1600MW Thermal Plan could not be learned yet.
But Adani Power recently sent a request to the BPDB to issue the demand note to get electricity from the mentioned plant, where the coal price was quoted at $400 per tonne.
As per the Power Purchases Agreement (PPA) with the Adani Group, the price of coal will be “pass-through”, meaning Bangladesh will have to pay the market price for coal imports, without any price ceiling or discount provision.
BPDB officials found the Adani-quoted price around 60% higher than the cost of coal, with the same heating value, which has been used in the Payra 1320MW Thermal Power Plant built in Patuakhali of Barishal.
The Adani-quoted coal price and electricity cost from the Godda power plant has been widely criticised by both national and international media.
Therefore, the BPDB, the state-owned single buyer of electricity, recently sent a letter to the Adani Group demanding a price mechanism to make the coal price more competitive.
A four-member delegation of Adani flew here to discuss a mechanism. On 23 February, both parties sat for a meeting to discuss the price of coal and the expected discount.
In the meeting representatives of Adani Group, led by its managing director and CEO, assured the BPDB that its coal import cost will be in line with the prices at which other coal power plants in Bangladesh buy, said an official at Adani Bangladesh office.