HC bars Adani from arbitration until irregularity probe
Adani states the terms of agreement between Adani Power and Bangladesh Power Development Board does not subject it to the jurisdiction of the HC
Highlights
- HC stops Adani's Singapore arbitration on power bill dispute
- Arbitration paused until investigation committee submits report
- Petition alleges irregularities in the 2017 Adani power deal
- Adani power price much higher than other regional sources
- BPDB, Adani still in negotiations over payment disagreements
The High Court has issued an injunction preventing India's Adani Group from proceeding with arbitration in Singapore regarding unpaid bills under a power purchase agreement with Bangladesh.
In its order, the court said the arbitration must remain suspended until the committee it appointed to scrutinise the agreement and investigate potential irregularities submits its findings.
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A High Court bench of Justice Md Bazlur Rahman and Justice Urmi Rahman passed the order yesterday following a hearing of a petition.
Barrister M Abdul Kaiyum, who filed the petition on 12 November last year, challenging the legality of the 5 November 2017 power purchase agreement with Adani Power, said that despite being a foreign company, it falls under the jurisdiction of Bangladesh's legal framework as it is a party to the deal and the fifth defendant in the case.
Adani Power, however, in a statement said it is not subject to the jurisdiction of the Bangladesh High Court.
On 19 November last year, he sent a legal notice to the Bangladesh Power Development Board (BPDB) chairman and energy secretary to review or cancel the agreement with Adani.
After yesterday's High Court order, the petitioner told reporters that if Adani starts arbitration in Singapore before the investigation report, it would undermine the importance of the probe. He alleged that the deal with Adani involved multiple irregularities.
The petition highlighted that Bangladesh imports power at much lower costs from other Indian and Nepali sources compared to the Adani deal. Power purchased from Indian state-owned companies costs Tk5.5 per unit, from Nepal Tk8 per unit, and from other private Indian companies Tk8.5 per unit, while power from Adani costs over Tk14 per unit. Furthermore, media reports suggest the price negotiations with Adani were not transparent.
Exactly a year ago, on 19 November, another High Court bench issued a rule and interim order following the petition about the power deal. The court formed a three-member committee to investigate the power purchase agreement and submit a report.
The committee, consisting of international energy and law experts, was instructed to report on the legality of the deal – signed on 5 November 2017 during the previous Awami League government – within 60 days of formation.
Meanwhile, on 3 November this year, Adani Power said it has opted for an international arbitration process to resolve disputes over Bangladesh's power supply payments.
The company led by Indian billionaire Gautam Adani has been at loggerheads with the Bangladesh Power Development Board over pending payments for the electricity it supplies as part of a pact that both sides had signed in 2017.
"There are disagreements in the way certain cost elements are calculated and billed. Hence, both partners have agreed to invoke the dispute resolution process and are confident of a quick, smooth and mutually beneficial resolution," an Adani Group spokesperson said in a statement.
However, Power, Energy, and Mineral Resources Adviser Muhammad Fouzul Kabir Khan told Reuters that negotiations are still on. "Once that process is over, we will move towards international arbitration, if needed," he said.
Adani Power supplies electricity from its coal-fired 1,600 megawatt Godda power plant in eastern India, which meets nearly a tenth of Bangladesh's power needs.
Adani Power's statement
Adani Power states, "We shall not be in a position to appropriately comment as we do not have the opportunity of reviewing the purported order of Hon'ble Bangladesh High Court.
"However, we would like to mention that the terms of the Power Purchase Agreement between Adani Power and Bangladesh Power Development Board does not subject Adani Power to the jurisdiction of the Hon'ble Bangladesh High Court."
Adani Power further said, "Moreover, as per Power Purchase Agreement (PPA), any dispute between the parties have to be resolved through Singapore International Arbitration Centre (SIAC), which is also not subject to jurisdiction of Bangladesh Courts."
