Whalesbook
Contractual Price Premium
A critical report from Bangladesh's government-appointed National Review Committee (NRC) has spotlighted significant financial concerns surrounding Adani Power's coal-fired plant agreement. The committee found that power supplied by Adani's Godda plant in India's Jharkhand state was priced at a substantial 39.7% premium over its closest private-sector competitor. This price divergence was identified as a direct result of "specific contractual choices" made during negotiations.
Procedural Irregularities and Tax Implications
Beyond the premium pricing, the NRC's findings, dated January 20, highlight "serious anomalies in the procedures through which the contract was awarded." Standard international practice dictates that independent power producers bear their own corporate taxes in their home jurisdiction. However, the NRC report indicates that Adani Power's agreement deviates, with Indian corporate taxes being billed to Bangladesh. The committee estimates the price paid is "roughly 50% higher than what it should be," labeling it the "most significant statistical outlier" in the nation's cross-border electricity procurement portfolio. The plant accounts for over 10% of Bangladesh's power supply.
Adani's Response and Payment Dues
Adani Power stated it could not comment on the committee's review, as the company was neither consulted nor provided with a copy of the report. The company also emphasized its continued electricity supply despite substantial payment dues, noting that other generators have curtailed or ceased operations due to non-payment. "We urge Bangladesh government to liquidate our dues at the earliest as this is impacting our operations," Adani Power said in a statement. The NRC report recommends reviewing existing electricity contracts to identify "renegotiation of the most fiscally damaging provisions."