PDB enters into power purchase agreements with authorized power plants. The deals do not specify a price per unit of electricity, but include a formula for determining the plants’ capacity payments. And the plants have varying operating and fuel costs when generating electricity.
The plants themselves buy the fuel, but the PDB pays the price later as per the receipt during the payment of the electricity price. When the cost of fuel increases, the cost of electricity increases.
The Australian Newcastle Index and Indonesia Coal Price Index are generally taken into account when determining coal prices. Australia and Indonesia are two coal exporting giants and their price indices are available online and followed globally.
Insiders said that there are some special discounts behind the prices announced based on the contemporary context.
Three responsible officials of Power Division and PDB said that the price of coal at the Adani plant will be fixed according to the average of Australian and Indonesian indices. Both the indices remain almost the same. However, the Australian index indicates the current coal price to be USD 100 per tonne higher than the Indonesian index.
Officials said Adani could claim an inflated price as per the current average of the two indices, or seek a declared price instead of a discount. That is why they are interested in settling this issue before starting power generation.
The persons concerned also said that the power purchase agreement with Adani was signed in a hurry in 2017 under the direction of the power department. PDB could not verify the cost of coal correctly as there was no imported coal based plant in operation. It had to rely on Adani’s own coal mine and its experience in building several coal-fired power plants in India.
Payra and Rampal power plants went into production in 2020 and PDB has now got an idea about importing coal.
Two PDB officials said there is a joint technical committee to oversee various issues including the implementation of the agreement and its progress. The issue of coal pricing was put up before the committee during its quarterly meeting on January 12, but Adani officials did not comment on the issue.
Rather he said that it was beyond the purview of the committee and suggested to write to Adani Group for further discussion. Later PDB sent a letter to Adani late last month.
On the condition of anonymity, a responsible official of Adani told Prothom Alo that talks have already been held with PDB in two rounds regarding the price of coal. Adani Power has agreed in principle to the demands of the PDB and is preparing to send a delegation to Bangladesh. He also said that there will not be much difference in the prices of coal used in Adani power plant and other power plants in Bangladesh.
Meanwhile, the transmission line has been installed to bring Indian electricity, but the work of the substation has not been completed yet.
Two officials of the Power Grid Company of Bangladesh (PGCB) said they tested the power supply on 16 December using a temporary substation. Along with this, sometimes 100 to 150 MW power is being supplied from the Adani plant. However, two substations will be given OK within the current month.