The interim government led by Nobel Laureate Muhammad Yunus claims the agreement signed in 2017 is not economically viable
The interim government in Bangladesh has accused the conglomerate owned by billionaire Gautam Adani of withholding tax benefits granted by the Indian government with regard to a power agreement between New Delhi and Dhaka, Reuters has reported, citing sources. The temporary administration led by Nobel Laureate Muhammad Yunus since August – when former Prime Minister Sheikh Hasina was ousted following weeks of deadly protests – is reportedly considering revisiting the deal.
The agreement for purchasing power from Adani Power’s coal-based power plant in Jharkhand, eastern India, was signed in 2017 during Hasina’s rule. The electricity provided by the project, which was established solely to cater to the neighboring country, constitutes about 10% of Bangladesh’s total supply.
According to Reuters, the contract included an additional implementation agreement that covered the transfer of tax benefits provided by Indian government to the project which, it claims, is not fulfilled. The Yunus-led administration reportedly claims that the deal was approved without a proper tender process and costs the Bangladeshi budget more than other power deals.
Since the supply of power began in July 2023, Bangladesh has fallen behind on payments to Adani Power, owing several hundred million dollars for energy already delivered, although both parties dispute the exact amount owed. The power minister in the interim government, Muhammad Fouzul Kabir Khan, claimed that the country now possesses enough domestic capacity to manage without the Adani supply.
The development is reported amid a larger controversy surrounding the Adani Group linked to the November indictment by US prosecutors of Gautam Adani and seven other executives for their alleged involvement in a $265 million scheme to bribe Indian officials for favorable power contracts. The Adani Group has dismissed the US allegations as “baseless,” while legal experts have raised questions about the extraterritorial application of US law.
According to the Financial Express, Bangladesh is grappling with increasing energy-import bills totaling approximately US$2.20 billion and has requested budgetary assistance from multilateral donor agencies, including the World Bank, for fiscal support. The report also said that many renewable energy projects initiated under Hasina’s administration have not been launched and now face uncertainty following the change in government.
Discussions about Bangladesh potentially reassessing its deal with Adani arose soon after Yunus assumed leadership in August following a student-led movement that ousted Hasina, who fled to India and is now facing criminal cases back home. Ties between Bangladesh and India have soared after Hasina’s ouster. The former prime minister had developed friendly ties with the Indian government and the two countries have implemented several important infrastructure projects, including in the power sector.
Bangladesh is also implementing a large nuclear power project in cooperation with Russia. The 2,400MW Rooppur Nuclear Power Plant, built at a cost of $12.6 billion and 90% funded by Russia, is currently in the final stages of construction. However, Dhaka has faced issues with repaying the loan due to Western sanctions on Moscow. According to Business Standard, the two countries have arrived at a mechanism for repaying the loan after extended negotiations.
