India Tightens Power Grip: New Export Contract Rules To Help Adani Dodge Uncertainty In Dhaka

The Centre on Monday allowed power-exporting companies to also sell within India in certain cases, a move that could potentially benefit the Adani Group.

The amendment, dated 12 August, revises the 2018 guidelines by allowing power exporters to connect to the Indian grid if the importing country fails to utilise the plant's full capacity for an extended period, or delays or defaults on payments to the company.

This change is significant, particularly in light of Bangladesh’s reliance on Indian power, with the Adani Group’s 1,600 MW Ultra Super-Critical Thermal Power Plant (USCTPP) in Godda, Jharkhand, being a major supplier.

Adani Power signed a 25-year power purchase agreement (PPA) with the Bangladesh Power Development Board (BPDB) in November 2017 to supply 1,496 MW of power from the Godda plant to Bangladesh via a dedicated 400 kV transmission line.

The Godda plant, operational since June 2023, is India's first transnational power project where 100 per cent of the generated power is exported to another country.

However, the ousting of prime minister Sheikh Hasina following protests over government job quotas has raised concerns about the future of this arrangement.

Much of the controversy stems from Dhaka paying significantly higher prices for Adani’s lower-grade coal, compared to what it pays for other coal-based power, thereby increasing the power tariff.

The new rule, which came nearly a week after Sheikh Hasina sought refuge in India amid massive protests, appears to be a safeguard for the politically connected Adani Group, offering protection from potential disruptions in its long-term agreement with Bangladesh.

However, the regulation also carries strategic implications for India. The South Asian nation of 170 million is facing its worst electricity crisis since 2013, and the commencement of power supply from the Adani Group has provided some relief.

Bangladesh's power lifeline continues to flow from India, with the latest BPDB data revealing that the country imported 2,656 MW of electricity in 2022-23 — all from India. The Adani Group’s Godda plant alone supplied 1,496 MW, accounting for a staggering 56 per cent of this total.

With over 10 per cent of Bangladesh’s energy coming from Indian sources, the strategic edge firmly lies with India. Yet, despite a return to stability in Dhaka, the future of Adani’s power deal remains anyone’s guess, leaving many to wonder what's next for this crucial partnership.