Bangladesh: Analyzing Hasina era Adani Power Deal

[UKBengali]

Importing upto 20% is not ceding control.

Hasina negotiated a fair deal with Adani especially compared to the Chinese ones in Pakistan.

And it includes buying cheaper hydro from Nepal.

It’s a brilliant deal when looked at holistically.

@UKBengali @SoulSpokesman

Yep.

There is always a bit of "give and take", which some here find hard to understand.

I think the Taka 14 per kwh is a little on the high side and 11-12 would be more appropriate and fair. Adani makes a nice profit and BD gets reliable power without paying the construction cost and also the pollution.

In actual fact only in the last few months has it been cheaper to generate electricity from BD's own coal fired power plants as the cost per tonne of coal has now gone down to more reasonable levels.

If there is a sovereign guarantee and the rate was readily agreed by the previous BD government, then BD may just need to swallow this as this extra expense will pale into insignificance compared to the huge savings of Taka 5-6 per kwh hydroelectricity from Nepal/Bhutan.

India is not some "bogeyman" but just another country that is looking after its own national interest. BD needs to do the same by engaging constructively with it and becoming a solid middle-income country in the 2030s.

 

[agidest]

This is a commercial discussion between Bangladesh and Adani Company.

Government of India has taken a step back and said that they can carry out negotiations and discussions and that GoI will not intervene.

Why are Indian members talking as if they have a stake in this discussion? Or for that matter, why are Bangladeshi members talking as if Indian Govt. is a signatory to the deal.

 

[UKBengali]

Have they even considered the cost of infrastructure to transfer energy across borders? Are they really expecting us to give them electricity at the same rate as India’s domestic consumers? We’re using our own resources, impacting our environment, and they think they should pay what we pay within India? Bangladesh isn’t another Indian state; it’s natural they'd have to pay a bit more. This isn’t a charity!

Yes that is an excellent point.

BD needs to pay more for the construction costs and also pollution/land loss that India is having to bear.

Some BD articles that compare this deal to what Adani may be charging Indian consumers are downright delusional.

 

[SoulSpokesman]

@UKBengali

as the cost per tonne of coal has now gone down to more reasonable levels.

If that is true, Adanis cost of power will also come down, because their tariff is linked to international coal prices.

Regards

 

[vasanthm]

This is a commercial discussion between Bangladesh and Adani Company.

Government of India has taken a step back and said that they can carry out negotiations and discussions and that GoI will not intervene.

Why are Indian members talking as if they have a stake in this discussion? Or for that matter, why are Bangladeshi members talking as if Indian Govt. is a signatory to the deal.

Some Indians feel like certain groups in Bangladesh are just looking for any excuse to blame India for everything, and it’s getting tiresome. Honestly, it might be better for Indian companies to steer clear of this kind of mess altogether.

 

[UKBengali]

It looks like the drama is over and Adani-BD are going to resolve the issue amicably.

BD and India won't fall out over what is in effect a minor issue.

Remember BD has ALWAYS paid its debt and this will be no different, even if late.

Bangladesh steps up payments to Adani Power to avoid supply cut

The Indian conglomerate reportedly halved supplies over an unpaid $800m bill.

www.bbc.co.uk

Bangladesh is ramping up payments to Adani Power after the Indian conglomerate cut electricity supplies by half, reportedly over an unpaid $800m bill.

Two senior government officials told the BBC they are already processing partial payments to Adani, which supplies 10% of the electricity used by Bangladesh.

“We have addressed payment glitches and already issued a $170 million [£143m] letter of credit to Adani group,” a senior Bangladesh Power Development Board official told the BBC.

Adani supplies Bangladesh from its 1600 megawatt coal-fired plant in eastern India. The company hasn't responded to BBC queries about cuts to its supply to Bangladesh, which suffers regular power shortages.
Officials say the company has threatened to suspend all supplies if the money owed to it is not cleared by 7 November. But the Bangladesh Power Development Board official said they did "not believe it would not come to a stage where full supplies are cut off".

Bangladesh officials told the BBC they will make payments gradually and regularly and are confident of resolving the payment crisis.

“We are shocked and surprised that despite us ramping up payments, supplies have been cut. We are ready to repay and will make alternate arrangements, but will not let any power producer hold us hostage and blackmail us,” said Fouzul Kabir Khan, energy adviser to the interim government.

Bangladesh stepped up repayments from $35m in July, to $68m in September and $97m in October, he said.

 

[agidest]

Some Indians feel like certain groups in Bangladesh are just looking for any excuse to blame India for everything, and it’s getting tiresome. Honestly, it might be better for Indian companies to steer clear of this kind of mess altogether.

That makes sense.

But frankly anyone defending Adani out of a misplaced sense of nationalism is mistaken. Adani will sell all us 3 times over before his morning tea.

It's a deal between a major business conglomerate and Bangladesh. We, i.e., Indians / India are almost irrelevant.

Bangladeshis who don't understand this are equally mistaken. Adani is a private player with deals all over the world. India is not Adani or vice versa.

 

[UKBengali]

@UKBengali

as the cost per tonne of coal has now gone down to more reasonable levels.

If that is true, Adanis cost of power will also come down, because their tariff is linked to international coal prices.

Regards

I think the problem has always been that no-one knows the details of this contract.

It should be open for public scrutiny and it may even be a good deal for BD afterall!

 

[vasanthm]

That makes sense.

But frankly anyone defending Adani out of a misplaced sense of nationalism is mistaken. Adani will sell all us 3 times over before his morning tea.

It's a deal between a major business conglomerate and Bangladesh. We, i.e., Indians / India are almost irrelevant.

Bangladeshis who don't understand this are equally mistaken. Adani is a private player with deals all over the world. India is not Adani or vice versa.

No corporation is in it for charity, but it’s smart for nations to leverage the efficiency and innovation of the private sector to drive growth. Viewing every private sector deal as corrupt only leads to inefficient public sector management, more waste, and ultimately, missed opportunities for progress.

 

[SoulSpokesman]

@UKBengali

It should be open for public scrutiny and it may even be a good deal for BD afterall!

That is a fair point. My suspicion though is that there is no hanky panky in the contract- else the current Imported govt would have already exposed the contract and sought renegotiation/cancellation of the deal.

Regards

 

[UKBengali]

@UKBengali

It should be open for public scrutiny and it may even be a good deal for BD afterall!

That is a fair point. My suspicion though is that there is no hanky panky in the contract- else the current Imported govt would have already exposed the contract and sought renegotiation/cancellation of the deal.

Regards

Well we can work out roughly how much it costs a BD coal fired power plant to generate electricity by looking at the cost of Pyra power plant that was built by the Chinese and went online in 2021.

In 2021 it was Taka 6.40 per unit with a fuel cost of Taka 2.5/unit.
Even though fuel prices have come down from the huge levels of 2022/early 2023, coal still costs around twice as much and so it would be around Tk 10 per kwh now, with inflation taken into account.

Source: https://ep-bd.com/view/details/article/NTc2Mw==/title.

Now Adani does benefit as it uses its own coal mine and that is where the profit looks like it comes from, and not the cost of generating the electricity when you take into account construction and distribution costs.

Some people think that generating electricity from coal plants is cheap anymore but that simply is not the case. Cheaper than LNG and furnace oil for sure but more expensive than nuclear(even taking into account initial huge capital costs) and much more than domestic gas reserves.

Luckily BD just discovered another 5 TCF of gas reserves in Bola and that would be worth 10s of billions of dollars in saved forex for BD over the next 1-2 decades.

 

[BananaRepublic]

Well we can work out roughly how much it costs a BD coal fired power plant to generate electricity by looking at the cost of Pyra power plant that was built by the Chinese and went online in 2021.

In 2021 it was Taka 6.40 per unit with a fuel cost of Taka 2.5/unit.
Even though fuel prices have come down from the huge levels of 2022/early 2023, coal still costs around twice as much and so it would be around Tk 10 per kwh now, with inflation taken into account.

Source: https://ep-bd.com/view/details/article/NTc2Mw==/title.

Now Adani does benefit as it uses its own coal mine and that is where the profit looks like it comes from, and not the cost of generating the electricity when you take into account construction and distribution costs.

Some people think that generating electricity from coal plants is cheap anymore but that simply is not the case. Cheaper than LNG and furnace oil for sure but more expensive than nuclear(even taking into account initial huge capital costs) and much more than domestic gas reserves.

Luckily BD just discovered another 5 TCF of gas reserves in Bola and that would be worth 10s of billions of dollars in saved forex for BD over the next 1-2 decades.

@SoulSpokesman

My hunch is that Hasina wanted certainty so went for price guarantee based on Hedged price instead of spot price.

It’s like my mortgage.

For the first five years - whilst my earnings were tight - I wanted certainty hence went for a fixed mortgage.

Once I had built some equity and got a better paid job - I was more confident so went for a floating mortgage.

It’s risk and reward.

Problem is none of the juvenile delinquents have EVER bought complex financial instruments - they have no understanding of risk and stability and the related rewards and penalties.

Btw, I love it that you are still using my honorific for Hasina lol

BongoBandhobi lol

 

[hephaestus]

I think the problem has always been that no-one knows the details of this contract.

It should be open for public scrutiny and it may even be a good deal for BD afterall!

Fair ask.

 

[SoulSpokesman]

@LeonBlack08 @UKBengali @BananaRepublic

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,

Do you pay the same price for caviar and rui machher dim, or basmati rice and parmal? Have you adjusted for the calorific value of the coal being used by Adani? Keep in mind that Adani's index is based on Australian coal, which is generally of a higher calorific value than Indonesian coal. There is no Latin/Greek involved in reading and interpreting a PPA. If there was a hanky panky in it, it would be out by now. It has been three months since the IG took over-they could easily expose the contract by now.

Regards

 

[LeonBlack08]

@LeonBlack08 @UKBengali @BananaRepublic

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,

Do you pay the same price for caviar and rui machher dim, or basmati rice and parmal? Have you adjusted for the calorific value of the coal being used by Adani? Keep in mind that Adani's index is based on Australian coal, which is generally of a higher calorific value than Indonesian coal. There is no Latin/Greek involved in reading and interpreting a PPA. If there was a hanky panky in it, it would be out by now. It has been three months since the IG took over-they could easily expose the contract by now.

Regards

It seems you already know the caloric value of the coal used in all 3 of the plants. Because I for sure don't have the information available to me.

Please do share the specific details of the coal used in each of the three power plants.