Bangladesh: Analyzing Hasina era Adani Power Deal

[UKBengali]

What's the cost of power from this Japanese plant? Just curious to see if Adani is more expensive?

No firm idea but the technology is at a similar level to Adani.

With coal prices back down to 90-100 US dollars a tonne then it would be likely now be around 10 Taka per kwh compared to 14 for Adani.

Yes Adani is more expensive but some of this is due to the fact that Adani paid 3 billion US dollars to build the plant and create the transmission lines. 11-12 Taka per kwh seems reasonable under current market conditions.

Also remember that BD recently discovered 5 trillion cubic feet of recoverable gas reserves and cost of production from these is just 2-3 Taka per kw/h. Roopur nuclear with 2.4GW capacity will also come online next year.

In essence this plant is surplus to requirements now.

 

[Vikramaditya1]

My guess is that they probably want to cancel and resolve this issue.

Adani deal raised eyebrows in India as well. Many within Indian left have accused Adani deal to be corrupt and brokered by Modi. With Hasina now gone, the chances of the details of how the deal went down coming out in any court proceeding may hurt both Adani and Modi. This is why it is better for them to terminate on their own. And Bangladesh on the other hand would also like that as it saves them time and money going through the legal process.

Again just my own theory.

If you're looking for a shakedown with the whole Adani-Modi game, you won't like the end result, not only you'll end up with a hostile India but also you will be in breach contract you'll end up losing more than $800 mil due to interest payment for as long as you failed to pay, you'll end up paying the dues and any fines for breach of contract.. And it's not going to be pretty for BD.

In short, politics is not a smart play just pay the 800 mil, cut a deal with Adani quietly to pay up in like 1 year or something. It's not a small amount, no company gives you this long of a wait period. You're taking our largesse for granted and thinking of playing double games with it.

 

[UKBengali]

If you're looking for a shakedown with the whole Adani-Modi game, you won't like the end result, not only you'll end up with a hostile India but also you will be in breach contract you'll end up losing more than $800 mil due to interest payment for as long as you failed to pay, you'll end up paying the dues and any fines for breach of contract.. And it's not going to be pretty for BD.

Please copy/paste the whole contract here as you seem to know exactly what's in it.

 

[LeonBlack08]

It may help if you knew that a lot of BD garment factories have backup diesel generators.

BD garment industry grew when the supply to demand was much worse than now and will do so in the future.

Expensive but they can keep going for a few weeks till the brand new Japanese 1.2GB Matarbari coal fired power plant comes back online at the end of this month. That should suffice to plug the gap by the power loss from Adani.

Roopur nuclear next year will allow some of the more inefficient thermal oil power plants to close.

Industrial zones will get priority for power supply and households will suffer temporarily.

Adani is nowhere near major electricity supplier for Bangladesh. In fact we can afford to replace it completely. We have other sources of power to keep industry running until those two plants come online.

 

[drkrn86]

Adani is being unreasonable here.

BD is paying both current electricity import and covering previous debt and so there is no need for this.

Yes it may take 12-18 months to clear it all but BD is trying its best.

Adani's company too has to pay interestt to banks.
Is Bangladesh sticking yo the agreement made? If not then why blame Adani's?

 

[BananaRepublic]

Industrial zones will get priority for power supply and households will suffer temporarily.

Adani is nowhere near major electricity supplier for Bangladesh. In fact we can afford to replace it completely. We have other sources of power to keep industry running until those two plants come online.

You are right - there may be severe load shedding like the 1990s and early 2000s.

But Adani is not supplying enough to hit exports industries.

It’s not going to impact exports but will hit domestic production. Another supply side bottleneck that will keep inflation sky high!

 

[drkrn86]

If Adani unilaterally terminates its end of the contract, BD won't care and will probably be relieved.


Roopur nuclear with its huge 2.4GW capacity will come online next year. In the meantime any shortfall can be made up with buying coal for Matabari power plant that has similar capacity(1.2GW).

Strange decision from Adani.

Under current geopolitical circumstances BD nuclear powerplant is non functionally without India.
May be you have a point. Because BD won't be needing electricity from Adani anymore, they are trying to get their money before it's too late.

 

[BananaRepublic]

Adani's company too has to pay interestt to banks.
Is Bangladesh sticking yo the agreement made? If not then why

I don’t think the sane people are blaming Adani.

We are regretting the impatience.

Sometimes both sides might have a point.

So better to resolve it amicably?

 

[drkrn86]

The Hindenburg short reports has hurt him quite a bit.

Not quite.

 

[drkrn86]

Yes I know and Adani is right to want the money back as soon as possible.

BD was willing to pay 100 million US dollars a month when the energy supplied was costing it 60 million US dollars.

So clearing 40 million per month is still a decent chunk per month out of the 850 million US dollars owed.

BD cannot pay what it does not have. Adani cannot win if it goes to court here.

Eventually you have to pay your dues.

You should stick to the stipulated terms.

Adani need not go to court. They will just stop the supplies. BD govt will eventually comply.

 

[drkrn86]

Here is the report from a top Pro India newspaper in Bangladesh -

"According to sources from the Power Development Board (PDB), the 1,320 MW power plant at Payra in Patuakhali is charging USD 75 per tonne of coal. In contrast, the coal prices at Chattogram’s Banshkhali SS Power Plant and Bagerhat’s Rampal Power Plant are both under USD 80 per tonne.

Adani, however, is requesting USD 96 per tonne of coal, which is USD 16-21 more per tonne than the prices at Payra and Rampal."

Redirect Notice

Not an expert.
But, every plant is different.
Quality requirements vary, either machinery wise or local regulations wise.
Quality of coal decides the price in the end.

 

[BananaRepublic]

Eventually you have to pay your dues.

You should stick to the stipulated terms.

Adani need not go to court. They will just stop the supplies. BD govt will eventually comply.

BD government is already complying.

Happy to pay what’s due.

Neither side will look good in court.

Needless drama!

 

[uksyl]

I don’t think the sane people are blaming Adani.

We are regretting the impatience.

Sometimes both sides might have a point.

So better to resolve it amicably?

At the end of the day neither India or Bangladesh will be going anywhere. We share the same region and have to work together. Politicians and administrations come and go, geography stays the same.

Also in the same vein we (Bangladesh and India) share the same continent as China, ASEAN block and other far eastern states such as Japan, South Korea and need to optimise our relations and economic ties. The world is moving east.

BRICS is working on replacing the dollar and we are in between the two largest (population wise) BRICS member states, China and India and need to leverage that.

 

[drkrn86]

There’s plenty of demand for that in India.

And Adani is not losing its 850 million dollar power plant. It’s still in India lol

Dude, their current produce will have a market (India).
The current thread is about the existing dues.

 

[drkrn86]

I don’t think the sane people are blaming Adani.

We are regretting the impatience.

Sometimes both sides might have a point.

So better to resolve it amicably?

Reasonable