BPDB seeks Adani to lower coal price for purchase

Bangladesh Power Development Board (BPDB) wants a negotiation with Indian company Adani over a 'discount' on coal price, as it feels that Adani has quoted an excessive rate for coal purchase.
"In our view, the coal price, Adani has quoted for the Godda power plant (a dedicated plant, from where Bangladesh will get 1,600 MW of electricity), is excessive - it should be lower, which is what we are paying for the imported coal at our other coal-fired power plants," BPDB claimed in the letter to Adani.

However, the coal price quoted by Adani is Tk 12 more per unit, compared with the price it pays for the electricity bought from coal-fired plants in Bangladesh, according to the BPDB data book.

Earlier, Adani Power sent a request to BPDB to issue the demand note, where the coal price is quoted at $400 per metric tons (MT). The PPA with Adani Power was signed in November 2017 in Dhaka.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid also raised the issue to the Adani Power Authority in January during a visit to the Power Plant. Bangladesh is set to import 1,600 MW of electricity from this plant.

Later, the BPDB sent the formal request letter to Adani Power last month asking for the PPA to be reviewed and tariff structure to be adjusted before it can start importing the electricity from March 2023.

"This is not the present state of coal price in the international market, it should be less than $250/MT, we are producing power from two coal fired power plants in the country, $250/MT is what we are paying for the imported coal," BPDB official said.

BPDB officials told the Daily Observer that the PPA with Adani is not the same as others, the provision of 'discount' on the purchase of coal in the PPA is absent here. In these PPAs, the price of coal to be purchased as primary fuel was kept as 'pass-through', the official said.

Usually, the price of coal is calculated on the basis of the Newcastle Price Index, with purchases of high quantities or with higher calorific values enabling the buyer to avail discounts of up to 55 per cent on the bulk value.

However, this provision was made mandatory in the PPAs for coal power plants signed with other independent power producers, Rampal, Payra are examples, the official said.

"We are following Newcastle index pricing for importing coal," quoting the State Minister for Power energy and Mineral Resources Nasrul Hamid, reports Reuters.

"Now that we are getting a discount on the pricing for other coal plants, such as the Payra power plant, we want to open the door for negotiations with Adani, too. We have sent them a letter to discuss the issue."

Adani Power is yet to respond to the BPDB request, BPDB said.

As per Power Division, Bangladesh would be paying Adani Power an estimated $23.87 billion, equivalent to almost Tk 240,000 crore (considering US dollar exchange rate at Tk 100), over the 25-year life cycle of the plant, if the PPA remains unchanged.