Adani Power, a key supplier to Bangladesh, is under pressure as Dhaka accuses the company of breaching its power supply agreement. The interim government in Bangladesh alleges that Adani Power withheld tax benefits promised under the 2017 deal and seeks to renegotiate terms, citing high costs and lack of competitive bidding.
The agreement, signed during Sheikh Hasina’s tenure as Bangladesh’s Prime Minister, granted Adani Power exclusive rights to supply electricity from its coal-based Godda plant in eastern India. However, the Bangladesh Power Development Board (BPDB) claims Adani Power failed to pass on tax exemptions provided by India, which could have saved Bangladesh approximately $28.6 million annually.
Bangladesh, already behind on payments, owes Adani Power between $650 million and $900 million, according to conflicting estimates. The financial strain has been exacerbated by the country’s dollar shortage, limiting its ability to settle foreign debts. In response, Adani Power halved its electricity supply in October 2024, sparking further tensions.
The controversy intensified following the recent indictment of Adani Group executives by U.S. prosecutors over a $265 million bribery scheme. Bangladesh’s interim government, led by Nobel laureate Muhammad Yunus, is leveraging these developments to push for greater scrutiny of the deal.
A court-ordered investigation is underway, and the government has formed expert panels to reassess major energy contracts signed under Hasina’s administration. Critics argue the deal lacked transparency, as it was awarded without a competitive bidding process under a since-repealed 2010 law.
Adani Power denies any wrongdoing, maintaining that it has fulfilled all contractual obligations. A company spokesperson stated there had been no communication from Bangladesh indicating a review of the deal.
The company contends the Godda plant’s operations align with Indian foreign policy objectives and are incentivized under a special economic zone. However, BPDB officials claim Adani Power has ignored multiple requests to remit the tax benefits.
The dispute hinges on tariff calculations and payment arrears. Bangladesh is pushing for revised benchmarks to lower energy costs, while Adani Power insists on adhering to the original agreement. Arbitration could take place in Singapore if negotiations fail, but Bangladesh’s next steps depend on the findings of the ongoing investigations.
The dispute highlights broader issues of governance, transparency, and the financial impact of high-cost energy deals on developing economies. With allegations of irregularities and political interference surfacing, the outcome could reshape Bangladesh’s energy policy and its relations with Indian corporate entities.
