The Bangladesh High Court has ordered a halt to the Adani
Group’s ongoing move toward arbitration in Singapore over unpaid
bills under its power purchase agreement with Bangladesh, The
Business Standard reported on November 19. The injunction will
remain in force until a court-appointed committee completes its
review of the agreement and reports on possible irregularities.
The bench of Justice Md Bazlur Rahman and Justice Urmi Rahman
issued the order after hearing a petition filed on November 12 last
year by Barrister M Abdul Kaiyum. The petition challenges the
legality of the power purchase agreement signed with Adani Power on
November 5, 2017. Kaiyum argued that although Adani Power is a
foreign company, it remains subject to Bangladesh’s legal
jurisdiction because it is a party to the contract and named as the
fifth defendant in the case.
The petitioner had earlier served notice on the Bangladesh Power
Development Board and the energy secretary on November 19 last
year, requesting a review or cancellation of the agreement.
Following the latest court order, he said that allowing arbitration
in Singapore before the committee’s findings are submitted would
undermine the purpose of the investigation. He also alleged that
the original deal contained multiple procedural and financial
irregularities.
The petition points out that Bangladesh procures electricity at
significantly lower rates from other Indian and Nepali suppliers.
State-owned Indian companies charge BDT5.5 ($0.045) per unit,
Nepali suppliers BDT8 per unit and other Indian private producers
BDT8.5 per unit. Power purchased from Adani, by comparison, exceeds
BDT14 per unit. Media reports have also raised concerns over a lack
of transparency in the negotiation process.
A year earlier, on November 19, another High Court bench had
issued an interim order and directed the formation of a
three-member committee of international energy and legal experts to
evaluate the legality of the 2017 deal, signed during the previous
Awami League administration. The committee was instructed to report
within 60 days of its formation, but its findings have not yet been
submitted.
On November 3 this year, Adani Power(NSE: ADANIPOWER) announced
that it had opted for international arbitration to address disputes over
payments owed by Bangladesh under the agreement. The company, led
by Indian industrialist Gautam Adani, has been engaged in a lengthy
disagreement with the Bangladesh Power Development Board regarding
outstanding bills and cost calculations. Government officials,
however, have stated that negotiations are still in progress and
arbitration will proceed only if those talks fail.
Adani Power supplies electricity to Bangladesh from the 1,600-MW
coal-fired Godda plant in eastern India, which accounts for almost
10% of Bangladesh’s power supply.
In its formal position, Adani Power has stated that it is unable
to comment on the High Court’s order without reviewing it, but
maintains that the power purchase agreement does not place the
company under the jurisdiction of Bangladesh’s courts. The company
says the contract stipulates that all disputes must be resolved
through the Singapore International Arbitration Centre, which it
argues is not subject to Bangladesh’s legal authority.
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