The 104 km Bogra (West) to Rohanpur 400 kV grid transmission line and substation is ready to carry electricity from Adani Power’s 1,600 MW thermal power plant in Godda district of Indian state of Jharkhand, although the issue of revising the tariff structure, that the government is belatedly pursuing, is not settled yet with the Indian company.

“Our transmission line and associated substations are ready for operation. We’ve been conducting some test runs of the installations,” said Md. Alamgir Hossain, the project director of the Southwest Transmission Grid Expansion Project.

According to official sources, the Power Grid Company of Bangladesh (PGCB) has been implementing the project with the financial support of the Asian Development Bank (ADB) at a total cost of Tk 3273.78 crore. The Bangladesh government and PGCB are also financing the project.

The electricity from Adani Group will enter Bangladesh through a 26 km line from Bangladesh border to Rohanpur and then it will come to Bogura grid substation.

Recently, dismissing any uncertainty over the Adani power’s availability to Bangladesh national grid, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the electricity from the Jharkhand power plant will be added to the national grid in March as per the agreement.

As per the report, 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.

A highly placed source at the BPDB said that the organisation sent a letter date January 23 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)”.

Nasrul Hamid said the tariff of Adani’s power will be competitive compared with other coal-fired plants like Payra power plant.

However, official sources said BPDB is yet to receive any official reply from the Adani Group on its request for revising the power tariff through “adjusting/changing the coal pricing mechanism of the power purchase agreement (PPA)”.

“A representative has informed us that a high level team will visit Bangladesh soon to discuss the coal price and power tariff issue,” he told UNB on condition of anonymity.

Since practically all the power generated by the plant located in the Godda district of Jharkhand state will be exported to Bangladesh, Adani Power requires a demand note from BPDB that it can present to Indian authorities before opening LCs against the coal import.

Adani Power recently sent a request for BPDB to issue the demand note, where the coal price is quoted at $400 per 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.

A number of BPDB officials told UNB the Adani’s power tariff might be between Tk 20-22 per kilowatt hour (each unit) because of the absence of a provision for discounts on the purchase of coal in the PPA signed with Adani Power, that allowed the Indian firm to quote such a steep bill for the coal.

The absence of such a provision is all the more notable since it was made mandatory in the PPAs for thermal power plants signed with other independent power producers, domestic or foreign. In these PPAs, the price of coal to be purchased as primary fuel was kept as “pass-through”.

Officials said that they have been working on a number of alternatives to offer Adani so that its coal price could be reduced to ultimately lower the power tariff.

“If Adani’s power tariff is not competitive, it would be difficult for BPDB to keep it on the merit list to take its electricity for the national grid,” said another top BPDB official.

Published by HT Digital Content Services with permission from United News of Bangladesh.