With the Adani Group’s stocks continued to be hit hard by the Hindenburg Research’s report, Prime Minister Narendra Modi’s government on Thursday subtly distanced itself from a power purchase agreement between India’s richest man Gautam Adani’s conglomerate and neighbouring Bangladesh, although the deal appeared to have run into a hitch.
The Bangladesh Power Development Board (BPDB) has sought revision of a 2017 agreement to buy electricity from a 1600 MW plant of the Adani Power Limited – a unit of the Adani Group – at Godda in Jharkhand in India. The BPDB has asked for the revision of the deal as the price the Adani Power Limited asked for electricity generated at the coal-powered plant appeared to be too expensive.
“I understand you are referring to a deal between a sovereign government and an Indian company,” Arindam Bagchi, the spokesperson of the Ministry of External Affairs, said in New Delhi, when journalists asked him about the position of the Government of India on the BPDB’s objection to the high coal prices cited by the Adani Power Limited. “I do not think we are involved in this,” said Bagchi, distancing the Government of India from the hitch the deal had apparently gone into.
India’s diplomats had in the past cited the November 2017 Memorandum of Understanding (MoU) between the Adani Power Limited and the BPDB for supply of power to the neighbouring country from the plant at Godda in Jharkhand as an example of bilateral cooperation between the two nations, particularly in the energy sector.
The UNB news agency of Bangladesh reported that the BPDB had sought revision of the deal as it had received a request from Adani Power Limited in connection with opening Letter of Credit in India to import coal for the power plant for supply of electricity. “In our view, the coal price they have quoted ($400/MT) is excessive – it should be less than $250/MT, which is what we are paying for the imported coal at our other thermal power plants,” the UNB quoted an unidentified BPDB official saying.
The UNB also reported that the BPDB had asked for review of the power procurement agreement and readjustment of the tariff structure before it could start importing electricity from the Adani Power Limited’s plant in India.
“We do think that greater economic integration and connectivity with our neighbours assist our process of development. We have been talking about our neighbours benefiting from the economic growth of India," the MEA spokesperson said. “We have tried to make it easier for connectivity, be it physical or energy or power transmission or any of those or even waterways,” he said, noting that Bangladesh had an important place in India’s 'Neighbourhood First' policy.
"And, under that, we of course, would like to see greater economic interconnections, integration of projects, investments. But, if a certain project is not working for financial or economic reasons, I don't think that's a reflection on the relationship,” said Bagchi.
He, however, said that New Delhi would continue with its efforts to see how it could bring India and Bangladesh closer together through greater economic investment and trade linkages.
Asked if any foreign governments reached out to New Delhi inquiring about the status of Adani Group in the backdrop of the report of the Hindenburg Research on the conglomerate, the MEA spokesperson said that he was not aware of any such discussion.
"I do not know if they will approach the MEA. I am not aware of any such outreach at all. I do not think it is a foreign policy issue. If there is any query that they might have vis-a-vis a private organisation, maybe they will route it through other concerned departments. I am not aware...I do not think we have been approached by any government," he said.
Bagchi also dismissed the speculation that controversy over the Adani Group would cast a shadow over India’s G-20 presidency.