Bangladesh will pay enough to build 3 Padma bridges as capacity payment to Adani

Three Padma Bridges, nine Karnaphuli River Tunnels or four metro rails: that is how many mega infrastructures Bangladesh can build with the money it is paying to the Indian Adani Group as capacity payment under a power purchase agreement (PPA).

Bangladesh will pay around $11.01 billion for importing 1,496 megawatts (MW) of electricity from Adani Godda 1,600 MW Thermal Power Plant over its 25 years of lifetime revealed a report co-published by the Bangladesh Working Group on External Debt (BWGED) and Indian Growthwatch.

"The amount for the capacity charge is nine times higher than the budget of Karnaphuli River Tunnel and more than four times than the Dhaka Metro Rail," said Hasan Mehedi, an author of the report and member secretary of the BWGED.

Since 2010-2011, Bangladesh Power Development Board (BPDB) has paid around $8.54 billion as capacity charges to independent power producers (IIPs) and rental and quick rental power plants owners.

"This power plant will be a huge burden on the Bangladesh economy. It doesn't make any sense to import coal power from India when Bangladesh is experiencing around 60% overcapacity now," Mehedi said.

On 2 June, at a citizen discussion held at the National Press Club, State Minister of Power Energy and Mineral Resources Nasrul Hamid, however, claimed that the country does not have overcapacity in electricity. 

He said apart from captive power, the total installed capacity of power is around 21,000MW. But the capacity stands at 16,000 MW to 17,000MW if 10% for derated capacity and 10% for scheduled maintenance is excluded, whereas the current demand is around 14000MW.

Instead, we see capacity shortage if we consider 20% standby reserve margin. 

The BPDB signed an agreement with Adani Group in November 2017 to offtake 1,496 MW power from its Godda Coal Power Plant under the cross-border electricity trade arrangement.

As per the agreement, the BPDB agreed to pay $0.038 or Tk3.26 per (kilowatt hour) kWh as capacity charge, higher than any other power plant in Bangladesh.

As per the report estimates, the cost of electricity from the Godda power plant will be at least tk9.09 per kWh, which is 56% higher than other imported electricity and 196% higher than solar power in India.

According to the BWGED and Growthwatch's report, the Adani Group may take $423.29 million as capacity charge per year, but the money will not benefit the Bangladeshi people.

In addition to that, the cost of electricity from the Godda Adani Group will increase by 5.5% per year, while the cost of solar power will be decreasing at a yearly rate of 10%.

At present, Bangladesh imports 1,160MW electricity from India through cross-border electricity trade agreements. 

The first unit of 1600 MW is scheduled to start commercial operation by this July while the second unit will come online by December this year.

But the corresponding transmission line from Indo-Bangla border to Bangladeshi national grid has not been prepared yet.

Sources at the BPDB said that Bangladesh won't be able to receive the electricity until December this year.

Even if the transmission line were built by December 2022 according to the plan, Bangladesh will have to pay $141.10 million of capacity charges in four months only.

Md Mizanur Rahman Sarkar, project director at Rahanpur to Monakasha Border 400kV Transmission Line, told The Business Standard, "The physical work of the Bangladesh part of the project is almost completed. But transmission line in the Indian side has yet not been completed."  

Sarkar, however, said that the power evacuation would be started within five to six months. 

For evacuating electricity from the plant, 134 km (30km in Bangladesh side and 104km in Indian side) transmission line construction project was taken by both countries.