Caught between a row over the price of coal and this week’s crash in its share valuations and credit ratings, the Adani Power project planned as a major Indian infrastructure push to provide electricity to Bangladesh may be delayed by another six months, local reports said.
The project is one of a number in the neighbourhood — including those in Bangladesh, Sri Lanka, Nepal and Myanmar — that have accompanied the Narendra Modi-led government’s “Neighbourhood First” initiative in the past few years. Highlighting the big-ticket announcements, Adani chairperson Gautam Adani has met with regional leaders, including Bangladesh Prime Minister Sheikh Hasina in September 2022 and then-Sri Lankan President Gotabaya Rajapaksa, while Adani family members have met with senior officials from Myanmar and even Indonesia.
However, with the group’s slide in fortunes and the cancellation of the Adani Enterprises FPO, governments in neighbouring countries are watching the company’s market situation closely, even as the Ministry of External Affairs (MEA) made it clear that any setback to projects would not affect ties, emphasising that the Adani stock’s fall was “not a foreign policy issue”.
“If a certain project is not working for financial or economic reasons, I don’t think that’s a reflection on the relationship,” MEA spokesperson Arindam Bagchi said on Thursday.
Project delayed again
He was responding to questions about the controversy surrounding an Adani thermal power project in Jharkhand’s Godda, which was due to supply electricity for Bangladesh starting from January 2022, a deadline that has already been delayed twice.
According to the United News of Bangladesh’s report quoting government officials (which has not been denied), the Bangladesh Power Development Board (BPDB) has written to Adani Power demanding that they reduce the price of coal to be purchased from Adani’s Carmichael Mines in Australia. Presently, Adani Power is reportedly billing Bangladesh $400 per metric tonne, far higher than the $250/MT rate that BPDB is paying at its other thermal plants.
The Adani Group did not respond to requests for a comment from The Hindu, but it is understood that unless BPDB sends a demand note for procuring the coal, the Godda project transmission will be delayed further. State officials quoted in a number of local reports say that the project’s prime lenders, State-owned Power Finance Corp. (PFC) and Rural Electrification Corp. (REC) would then have to sign off on the delay.
MIngling corporate-national interests
Other Adani projects in the region have also been in the limelight for various controversies, including in Myanmar, where the Adani group exited a $290 Yangon river port project in 2022 after the threat of U.S. sanctions.
In Sri Lanka, an uproar had followed the leak of a November 2021 letter from the Ceylon Electricity Board’s then-chairman M.M.C. Ferdinando to the Sri Lankan Finance Ministry asking them to allow an Adani proposal for a 500 MW wind energy project off the coast of Mannar, and to treat it as a “proposal from the Government of India to Sri Lanka”. When asked about this during a parliamentary committee meeting, Mr. Ferdinando, who later recanted his words, said that he had been summoned by President Gotabaya Rajapaksa who told him that he was under “pressure” from Prime Minister Narendra Modi to okay the Adani proposal. Mr. Rajapaksa denied the allegation, and Mr. Ferdinando resigned in June 2022 after withdrawing his statement.
Officials told The Hindu that the government is watching developments in the wake of the latest trouble for the Adani Group, given that Sri Lanka, which is in the middle of a financial crisis, is hoping to see more infrastructure investment from India. Apart from renewable energy, the Adani Group has also begun construction on the $700 million Colombo port project for the West Container Terminal and officials said that they “are not concerned at the moment” as the funding for the port is on a “strong footing”.
‘Adani forays seen as push by India’
Meanwhile, officials in Nepal are also tracking developments in the Adani saga, given the group’s plans to lay transmission lines to connect hydropower projects in Nepal to a planned South Asian renewable energy grid. Such a grid would provide power from Nepal and Bhutan to India, Bangladesh, and possibly Sri Lanka in the future. After Nepal PM Sher Bahadur Deuba’s visit to Delhi last year, when he and Mr. Modi had issued a joint vision statement on energy cooperation, Adani Group officials had visited Nepal with a particular interest in hydropower projects in the Karnali Basin. However, they have not made any announcement yet, possibly given the recent change in government.
“Definitely people in Nepal are interested in the developments [around the Adani group] as the group is seen as close to the current Indian administration and their forays into Nepal were generally viewed as part of a push by the Indian establishment”, said Sujeev Shakya, a business consultant and founder-chair of the Nepal Economic Forum.
The Adani Group declined requests from The Hindu for a comment on the sustainability of project financing in the neighbourhood, especially given the current developments. In a region where energy and connectivity are in high demand, India’s neighbours will be particularly interested in how quickly the group can stabilise its position in order to procure funding for its projects.