Bangladesh to review Sheikh Hasina-Adani Group power deal

The Bangladesh interim government, led by Muhammad Yunus, has announced a comprehensive review of power agreements, including a controversial power deal with the Indian conglomerate Adani Group, signed during the tenure of ousted Prime Minister Sheikh Hasina.

A review committee, led by retired High Court judge Moyeenul Islam Chowdhury, has recommended the involvement of international legal and investigative agencies to examine the agreements. Seven major energy and power projects are currently under review, including the Adani Group’s Godda coal-fired power plant. The committee has suggested that certain contracts may need to be scrapped or reconsidered, citing sufficient evidence to warrant action under arbitration laws.

The Godda thermal power plant, a wholly-owned subsidiary of Adani Power Limited, has faced criticism since its inception. Concerns have centred on the high costs of electricity supplied to Bangladesh, with experts and political groups raising questions about the fairness of the deal.

In 2023, the Bangladesh Power Development Board (BPDB) sought to renegotiate the agreement, highlighting what it deemed excessive coal prices.

The origins of the contentious agreement trace back to 2015, shortly after Indian Prime Minister Narendra Modi’s visit to Bangladesh, when a memorandum of understanding was signed. Opposition parties in India have questioned Modi’s involvement in facilitating the deal.

Tensions surrounding the agreement escalated in recent months as the Adani Group demanded payment for outstanding power supply bills, amounting to $800 million. Despite Bangladesh’s dollar crisis, the state-run BPDB paid $150 million but fell short of settling the full amount. This led to a reduced power supply from the Godda plant in November, exacerbating an existing power shortage in Bangladesh.

India’s recent amendment of rules allowing thermal power plants established to supply neighbouring countries to sell power domestically has added another dimension to the controversy. The Adani Group’s Godda plant is the only such facility operating under this arrangement, with the rule change perceived as a safeguard against potential financial risks stemming from political and economic instability in Bangladesh.

The Adani Group has also faced setbacks internationally. Kenya recently cancelled infrastructure projects involving the conglomerate, including the proposed takeover of Jomo Kenyatta International Airport. The cancellations follow allegations of corruption, with US authorities accusing the group of running a large-scale bribery scheme.