Adani's electricity, coal prices have asked 60 percent more

The Indian company Adani Group, which is in discussion, wants to raise the price of coal by 60 percent for the power plant from which it will export electricity to Bangladesh. If the price of Adani coal is high, Bangladesh will have to buy electricity at a higher price.

It is known that Adani Group wants to set the price of coal at $400 per ton. They have informed the Bangladesh Power Development Board (PDB) to open a letter of credit (LC) for coal import at this rate. Earlier, the coal price of Rampal, a joint venture between Bangladesh and India, and Payra, a joint venture between Bangladesh and China, was as low as $250 per tonne. But Adani's price per tonne of coal is 60 per cent higher than that of Rampal and Payra.

However, PDB has objected to Adani's proposed coal price. PDB had also written to Adani in late January to send a delegation to discuss the rates. Accordingly, a technical delegation of Adani will come to Dhaka to discuss. There may be a policy decision on revaluation of coal prices.

The power plant from which electricity is supposed to be supplied to Bangladesh has been constructed in Godda district of Jharkhand state, India. The coal-based power plant has a capacity of 1,600 megawatts. Bangladesh will buy the entire electricity produced here for 25 years. Electricity supply to Bangladesh from Adani's plant may start next month, i.e. March. However, PDB is worried about the price of imported coal for this power plant before the start of production.

The PDB's letter to Adani said that the coal for Adani's power plants should be purchased at the same price as currently being purchased for Payra and Rampal power plants. Coal cannot be bought at a much higher price than those two centres.

Australia (Newcastle Index) and Indonesia Index (Index) are taken into account in determining coal prices. These two countries are major exporters of coal in the world. Their coal prices are regularly published in the online index. However, those concerned said that there are special discounts behind the announced prices. The discount depends on the agreement at the time of purchase of coal.

Officials of the Power Department and PDB said that according to PDB's power purchase agreement with Adani, the price will be averaged between Indonesia and Australia indices. Usually these two indices are close in price. However, currently the price of coal in Australia index is $100 per ton higher than in Indonesia. By fixing the average price, Adani can buy coal and charge additional price from PDB. Besides, Adani can ask for the price of electricity based on the price published in the index without showing the discounted price. So they want to solve the issue before the start of electricity production.

After the Awami League government came to power in 2009, it emphasized to increase the power generation capacity. Investments were made in establishing power plants one after another. Along with this initiative was taken to import electricity from India. Now 1 thousand 160 MW electricity is coming from India. The agreement with Adani was signed in 2017. After the agreement, Adani started construction of the power plant.

At that time, no imported coal-based power plant was started in the country. Therefore, the PDB could not properly scrutinize the issue of coal prices at that time. Adani has had to rely on its experience of owning coal mines and building several large coal-fired power plants in India. Payra and Rampal power plants have come into production in the country since 2020. PDB now has an idea about importing coal.

Electricity Secretary Md. Habibur Rahman told the media that the price of coal in Adani's power plant will not be higher than Payra and Rampal. They also agreed to it in principle. It will be decided before buying electricity. A technical team from Adani will come to discuss this.