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The cost of electricity from India's Adani Power, which started transmission on Thursday evening, is set to be lower than that of any of the existing coal-power plants in Bangladesh, for now, though future remains unclear.
The energy charge in the case of Adani Power per kilowatt hour (kWh) will be 9.39 US cents coupled with an additional 4.24 US cents as "fixed" capacity charge, totaling 13.63 US cents or Tk 14.34 per kWh, said a spokesperson for Adani Group.
According to officials concerned the energy price in Rampal Power Plant or Maitree Super Thermal Power Plant will be 14.04 US cents/kWh with a capacity charge of 4.85 US cents, totaling 18.89 US cents /kWh or Tk 19.87. The much-talked-about power plant close by the Sundarbans is owned by Bangladesh-India Friendship Power Company Ltd.
Data show that the energy price in Banshkhali Power Plant in Chittagong, a venture of S Alam Group, will be 14.37 US cents/kWh 4.60 US cents added up as capacity charge. The total comes to 18.97 US cents or Tk 19.95.
In January this year, Adani Power had requested Bangladesh Power Development Board (BPDB) to issue a demand note mentioning coal price as US$400 per tonne for the power station in a bordering Indian state which created an uproar at home and abroad.
Experts say the coal price that Adani quoted was based on Newcastle Index which often is considered a "spot market" rate, and the rate is for the best-quality coal which actually the Indian conglomerate would not use in the case of its Godda Thermal Power Station that will supply electricity to Bangladesh.
The BPDB officials had termed the price "excessive" and opined that the coal price should be less than $250 per tonne that the government has been paying in the case of other thermal power plants in Bangladesh.
At one stage of haggling, the BPDB had requested a cut in the coal price. Adani responded positively. In late February they had meetings with BPDB officials in Dhaka and agreed to cut down the coal price that would not be higher than that of other coal-fired power plants in Bangladesh.
The Adani spokesperson clarified to The Financial Express on Friday that the coal price would be charged as per the Power Purchase Agreement (PPA), leveraging the average of the Indonesian coal index Harga Batubara Acuan (HBA) and Globalcoal Newcastle (GCNC) Index, which for March 2023 is $197 and $187 per tonne respectively for 6332 kilocalories (Kcal) coal.
"Since at Godda, coal to be used is 4600 Kcal, the chargeable FOB (freight on board) rate of coal shall be $139. The delivered cost of coal at Godda, inclusive of ocean freight, port handling, and inland charges, shall be as per PPA, which is quite competitive and will mean energy charge of $9.39 US cents per kWh," the spokesperson said replying to an e-mail query.
"Adani confirms that its delivered cost in Bangladesh will not be higher than any of its peer imported coal-based stations," the mail reply adds.
However, experts and activists in Bangladesh say the electricity from Adani Power will be pricier for Bangladesh as no discount factor is considered for coal price in PPA and no flexibility in coal price is mentioned either in the deal.
Hasan Mehedi, member-secretary, Bangladesh Working Group on External Debt (BWGED), told the FE Friday in the case of Payra Thermal Power Plant, coal prices will go up and down in line with the international market rates.
Moreover, the BPDB will get 45-percent discount. Thus, when the coal price goes above $110 per tonne, the BPDB will pay 55 per cent of the additional cost of coal.
"But in the case of coal price for Adani Power there is no such issue," he said on a comparative calculation, which means Adani can charge the BPDB as it wants.
"There is no provision of coal-price flexibility in the PPP," he noted.
Mehedi said during last month's Dhaka visit, the Adani Power officials had a verbal discussion with BPDB officials on coal- price reduction, but, until now, "we did not hear anything about written agreement on this".
"Since no agreement is signed on coal- price flexibility, some days later Adani Power may decline to supply electricity at this price," he fears and calls for a revision of the PPA to resolve the riddles marking the power import.
The government, critics say, had to opt for power import to meet a growing demand at home although much of the accumulated generation capacity remained idle.