Adani seeks fresh lifeline for troubled Jharkhand power plant

Adani Power Ltd. is seeking fresh concessions from New Delhi for its $2 billion coal-fired plant in eastern India, which is currently struggling with a payments backlog from Bangladesh, the only buyer of its electricity.

In August, India's power ministry allowed Adani to sell electricity from the plant into India, but its location in a designated special economic zone, or SEZ, is hampering those domestic sales, people familiar with the matter said. Unless the trade ministry grants an exemption, they said, the power produced would be considered imported — and subject to a tax.

As part of that request, the company is also asking to keep a waiver on customs duty applied to the imported coal that it uses to fire the 1.6-gigawatt facility, said the people, who asked not to be named because the discussions are not public.

Without these concessions, the power becomes effectively impossible to sell to India's price-sensitive consumers.

Adani Power didn't respond to an emailed request for comment.

The Adani plant, which accounts for about a 10th of Bangladesh's power consumption, has already racked up as much as $790 million of dues as of the end of September, Adani executives said on an analyst call in October, though some payments from Bangladesh have begun to come through.

"We hope that there will be no further deterioration in terms of the outstandings and, as of now, we don't think that we need to look at that option, but if required, we can consider it," Nishit Dave, the company's head of investor relations, said on the call in response to a question on whether Adani plans to link the plant to the Indian grid. "We will explore options."

The payments owed by Bangladesh — originally the market for electricity from the plant — have accumulated amid efforts to review the power-purchase agreement signed under Dhaka's previous government, ousted earlier this year following accusations of widespread corruption.

Trouble at the plant adds to ongoing headaches for the Adani Group, whose top officials were indicted by US prosecutors last month over an alleged bribery scheme worth more than $250 million. Adani has denied the US allegations and said it would seek legal recourse to defend itself.

Other companies have already flagged the risk with India's SEZ regulation. In 2020, when India began finalizing the import taxes on solar cells and modules, more than 60% of its locally-produced modules came from these export promotion zones. After the government said it would levy a 40% import tax on panels and 25% on cells, local firms said this would make their modules costlier in the domestic market and lobbied the government for relief.

Since then, some producers have built capacity in areas outside these clusters.