IEEFA Says Adani’s Coal Power Will Increase Bangladesh’s Power Tariff

IEEFA Says Adani's Coal Power Will Increase Bangladesh's Power Tariff

A new report from the Institute of Energy and Economic Financial Analysis (IEEFA), Adani Godda coal-fired power plant, which will start producing and exporting power to Bangladesh from 16 December 2022, will come at a steep price, almost twice what was anticipated. The Australian energy expert group released this report on 14 December, saying Bangladesh Power Development Board (BPDB) will see more pricing pressure on power imported from the Adani Godda power plant. 

According to a Power Division source, Government authorities initially estimated the cost per kilowatt-hour (or unit) of power from the Godda plant at Tk8.71. Still, due to the high cost of Coal in the international market and high capacity charges, it was revised up to Tk15. 

Simon Nicholas, author of the IEEFA research titled “Carmichael Coal Is Not Reducing Poverty in South Asia, besides the Coal is being imported from Carmichael [in Queensland, Australia] and railed 700 km from port to the Godda power plant in Jharkhand state, India. The entire cost is being passed on to Bangladesh. Godda power will subsequently be exported to Bangladesh, apparently at a cost nearly double the previous estimate of roughly US$150/megawatt-hour (MWh).”

Nicholas also stated that the original idea for Godda was to use Jharkhand Coal but that this was later altered to Carmichael coal.

The BPDB then entered a power purchase agreement that allowed Adani to import Coal into an Indian coal-mining state from Australia and transfer the total cost to Bangladesh.

“This price is two and a half times what the state-owned utility BPDB sells power to wholesalers,” Nicholas explained.

“The vast discrepancy in price at which the BPDB buys and sells power has to be compensated by government subsidies that are becoming increasingly unaffordable. This will lead to the necessity to increase power rates dramatically to put the burden onto consumers.

“This process has already begun. The tariff at which the BPDB sells power to distributors was raised by 20% in November 2022, and power distribution businesses are now presenting recommendations to raise retail tariffs by the same amount.”

“The growing burden of fossil fuel imports has been placing Bangladesh’s electricity system under increasing financial strain for years,” according to the IEEFA, “and IEEFA has been warning that this will lead to the need for higher power rates.”

“Bangladesh will need to focus more on renewable energy moving forward if it wants to decrease the burden of fossil fuel imports and boost energy security,” according to the research.

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