Adani might face pressure from Bangladesh to reduce power price following US indictment: Ijaj Hossain

India's Adani Group's power deal with Bangladesh is likely to face greater pressure in the coming days following a US indictment of Gautam Adani and several top officials of the conglomerate.

Besides, the recent High Court order to investigate the 1,600-megawatt power deal that allowed the Adani Group to export electricity from its Godda power plant to Bangladesh, is likely to increase the pressure further.

Energy experts say in future negotiations, Bangladesh might try to pressure Adani into reducing the power price under the deal.

"The energy agreement between Adani and Sheikh Hasina government was controversial from the beginning as this contract, like many other energy contracts of Hasina years, was not done through tendering. Despite that the interim government had taken a positive approach and tried to continue dialogue," Ijaz Hossein, retired professor of Bangladesh Institute of Engineering and Technology, was quoted as saying by The Hindu.

"But after the US indictment, that space of dialogue may shrink as the group is likely to face greater pressure from Bangladesh to compromise on pricing," he added.

Bangladesh's power deal with Adani faced increased scrutiny following the fall of the Awami League-led government in the face of a mass uprising in August. Political party leaders and energy experts have pointed out that Bangladesh buyes electricity at high prices from Adani under the power deal.

Adani began to sell electricity from its coal-run Jharkhand power plant in April 2023.

Speaking about the nature of the deal to The Hindu, Ijaj Hossein pointed out that Adani offered a deal that appeared interesting in the beginning as it promised to bring coal from Australia and Indonesia to meet Bangladeshi demand. Bangladesh lacked a deep sea port to handle large coal shipments and Adani's offer made sense.

"However, critics here had started saying that Adani, which apparently received government subsidy in India, did not transfer that benefit to Bangladesh," said Hossein.

The Hindu, in its article "After U.S. indictment, Adani Group will face greater pressure in Bangladesh over power deal, says expert" by Kallol Bhattacherjee published today, notes that pricing under the power deal was an issue even during Sheikh Hasina's tenure.

However, "it is believed that the matter was handled to Adani's advantage because of better political relations between India and Bangladesh" under Hasina, writes Kallol.

In February 2023, Bangladesh Power Development Board had written to Adani Power seeking revision of the price, he notes, adding that at the time, Adani had quoted $400 per tonne, but BPDB argued it should be less than $250/MT as that was the price they had paid for other coal-fired power plants.

With the fall of the Awami League government, several energy projects taken up during the Hasina regime came under scrutiny, including the Adani Power deal. The Mohammad Yunus-led government has formed a special committee with noted economist Debapriya Bhattacharya that is currently scrutinising all power agreements under Hasina government.

Other setbacks

Adani Group is also facing accusations of racism at its Australian coal unit after an Aboriginal group filed a complaint with the Human Rights Commission in Australia, reports Reuters.

The Nagana Yarrbayn Wangan & Jagalingou Cultural Custodians in Queensland lodged the complaint, alleging racial discrimination by Adani's unit, Bravus Mining and Resources. 

According to the group, Adani employees tried to "verbally and physically obstruct and prevent" its members from accessing springs near the Carmichael coal mine to perform cultural rites and share cultural knowledge.

Separately, Kenyan President William Ruto announced the cancellation of a procurement process that was expected to grant Adani Group control of Kenya's main airport. 

Under the nearly $2 billion deal, Adani Group was to build a second runway at Jomo Kenyatta International Airport and upgrade its passenger terminal in exchange for a 30-year lease. 

Ruto also cancelled another 30-year, $736-million public-private partnership deal signed by an Adani Group firm and Kenya's energy ministry to construct power transmission lines.

Indian billionaire Gautam Adani has been charged with fraud in the US, accused of orchestrating a $256 million bribery scheme and concealing it to raise funds. 

The criminal charges, filed in New York, allege that Adani and seven others paid bribes to Indian officials to secure contracts worth $2 billion in profits over 20 years and to develop India's largest solar power project. The charges are accompanied by a parallel civil case filed by the US Securities and Exchange Commission.

Adani Group has denied all allegations, calling them "baseless," and pledged to pursue "all possible legal recourse."

Shares of Adani Enterprises, the group's flagship company, fell by 22% on Thursday, and other group firms also recorded losses. Adani Green Energy, at the centre of the allegations, announced it would not proceed with a $600 million bond offering. 

Yesterday, Adani Group's shares continued to decline, with reports suggesting some global banks may temporarily halt new credit to the group while maintaining existing loans.

The conglomerate has been under scrutiny since 2023 when Hindenburg Research, a US-based short-seller, accused it of decades-long "brazen" stock manipulation and accounting fraud. These claims, which Adani denied, triggered a major market sell-off and an investigation by India's Securities and Exchange Board of India.