Committee to review existing deals on coal purchase for power generation

The government has formed a review committee, headed by Power Secretary Habibur Rahman, to analyse the existing deals signed by the public, private and joint venture power companies to import coal for use in power generation.

"The nine-member high-level committee was formed on 23 January and its first meeting is set to be held on Monday (20 February )," a top official of the Power Division told UNB in exchange for anonymity since he isn't authorised to disclose it to the media.

Besides the Power Secretary, the committee also includes the Chairman of the Bangladesh Power Development Board (BPDB), the additional secretary of the Power Division (coordination), representatives from the Prime Minister's Office, Finance Ministry, and Commerce Ministry; the chief engineer (power generation) of BPDB, managing directors of the power generation companies, and the deputy secretary (development) of the Power Division, who will also act as member secretary of the committee.

The Power Division issued an internal office order in this regard notifying the matter.

Official sources said the review committee was formed following the report that Bangladesh will incur a financial loss of Tk700 crore per month and Tk8,400 crore annually due to the "faulty deal" signed with Adani Power to import electricity from its coal-fired 1,600MW Godda plant in Jharkhand state of India, first reported by UNB in January.

As per the deal, a BPDB official said, the price of coal will be "pass-through" which means Bangladesh will have to pay the market price for coal imports, without any price ceiling or discount provision.

Adani Power recently sent a request for BPDB to issue the demand note, where the coal price is quoted at $400 per metric ton -- far above what BPDB officials believe it should be given the present state of the international market.

"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 BPDB official said.

The BPDB sent a letter to the Adani Group seeking a revision to the existing PPA following the request it received in relation to opening LCs (in India) to import the coal that will be used as fuel for the 1,600MW plant in Jharkhand.

The BPDB sent the letter date 23 January referring to state minister-led delegation's recent visit to the Adani plant mentioned, "During the discussion, your side also opined that suitable mechanism will be devised to reduce this inconsistency of coal price by adjusting/changing the coal pricing mechanism of the power purchase agreement (PPA)."

Official sources said the terms of reference of the review committee mentions that it will review the coal pricing mechanism of the coal supply agreements (CSA) and power purchase agreements (PPA) with the IPPs to make necessary recommendations and also the coal pricing index of the coal supply countries.