Basic facts and figures
Name of coal-power plant: Godda power plant
Location: Near the town of Godda, state of Jharkhand, India
Adani subsidiary: Adani Power (Jharkhand) Limited, a wholly-owned subsidiary of Adani Power Limited
Capacity: 1600 MW
Countries involved: India, Bangladesh, Australia
Exactly a week after ousted Prime Minister of Bangladesh, Sheikh Hasina, left Dhaka on a military aircraft and landed on the outskirts of Delhi on 5 August 2024, the government of India amended guidelines relating to cross-border export of electricity.
Are the two developments connected? Yes.
The amendment to the rules will enable a controversial power project of the Adani Group, located at Godda in the Indian state of Jharkhand and which exports electricity to Bangladesh, to avoid losses in the wake of the regime change in that country. The Godda power station was constructed despite intense opposition from the local people. It runs on coal imported from Adani’s Carmichael mine in Australia.
The decision of 12 August 2024 to amend the rules relating to the export of electricity has been described by critics of the Prime Minister of India, Narendra Modi, as a brazen attempt to ‘bail out’ his crony, Gautam Adani, who was potentially facing large financial losses by exporting power to Bangladesh. At least this is how representatives of opposition political parties have described the move.
What were the generous conditions pertaining to the Godda power plant?
Adani’s Godda power plant enjoyed financially advantageous exemptions from Indian taxes and duties because all of the power it generated was to be exported. The huge financial advantages enjoyed by the project included the following:
- The precinct of the Godda power plant was declared a Special Economic Zone (SEZ), despite an earlier government policy preventing such status for stand-alone power plants.
- The Godda project was exempted from Customs duties on imported coal and power-generating equipment, goods-and-services tax, and a ‘clean energy’ cess (tax) paid by coal-based power projects.
- The Godda project was exempted from a requirement by the Jharkhand state government that new power plants had to make at least 25% of their output available to consumers in that state.
- Environmental rules were tweaked for the Godda project.
- Despite the project ostensibly being purely for export, Adani was allowed to access cheap government loans designed to facilitate the development of electrical power for Indian consumers. Around 72% of the $1.7 billion Godda project was covered by loans from two corporations owned by the Indian government – the Power Finance Corporation and the Rural Electrification Corporation.
These concessions were not passed on to Bangladesh in the power contract, thereby giving the Adani company an enormous financial windfall at the expense of power consumers in Bangladesh. In 2018, the international Institute of Energy Economics and Financial Analysis (IEEFA) published a report that described the Godda project as expensive and risky for Bangladesh, besides being an attempt to ‘prop up’ Adani’s Carmichael coal-mining project in Australia. In May 2017, the Jharkhand State Accountant General raised questions about the ‘preferential treatment’ and ‘undue benefits’ given to the Adani Group’s Godda project.
The political fallout
The ‘preferential treatment’ and ‘undue benefits’ to Adani’s Godda coal-power plant were given because the project was to be entirely export-oriented. The changing of the rules pertaining to Godda in August 2024 now enable Adani to sell power from Godda to Indian consumers. It is this moving of the goalposts that has prompted the criticism that the Modi government is bailing out its ‘crony’.
The Adani Group, not surprisingly, disagrees. In a statement reported on 16 August, four days after the change in India’s electricity export rules, Adani Power explained the amendment as ‘an industry-enabling universal provision aimed at streamlining power export processes without altering existing arrangements’.
‘We have been providing uninterrupted power to Bangladesh from our Godda plant. We understand the importance of reliable power supply to Bangladesh and are committed to fulfilling contractual obligations as per BPDB’s demand schedule and provisions of PPA,’ the company statement added.
(BPDB stands for the Bangladesh Power Development Board and PPA stands for ‘power purchase agreement’.)
The chain of circumstances that led to the establishment of the Godda project has been well-documented and has been considered scandalous by numerous observers in Bangladesh, India, Australia and elsewhere (as reported in 2019 in the New York Times). The power plant has now become even more controversial after India’s Ministry for Power changed the rules of the game by allowing Adani to sell power to the country’s ‘domestic tariff area’. This decision benefits only the Adani Group. The Modi government has so far not reacted to criticism of its decision to amend the rules.
Specifically, on 12 August 2024, the Indian government’s Ministry for Power issued an ‘office memorandum’ to amend the ‘Guidelines for Import/Export (Cross Border) of Electricity, 2018’ to allow power-generating projects in India that ‘exclusively supply electricity to neighbouring countries to connect to Indian electricity grids … to sell power within India in scenarios of sustained non-scheduling or payment defaults by neighbouring countries, ensuring optimal use of generating capacity’.
Two days later, attaching a copy of the memorandum, Jairam Ramesh, spokesperson of the Indian National Congress (henceforth Congress), the country’s largest Opposition party, sarcastically put out a Tweet (X): ‘The non-biological PM (of India) moves with lightning speed when the interests of his favourite tempowallah are involved’.
(Modi claimed in the run-up to this year’s general elections that his birth was not biological and also alleged that Adani had sent ‘tempos’ – large vans – filled with cash to Rahul Gandhi, the leader of the Opposition in the Lok Sabha, the lower house of India’s Parliament, who has been very critical of the relationship between Modi and Adani.)
Pointing out that ‘Adani imports coal from Australia to generate power in Jharkhand and supply it to Bangladesh’, Ramesh added that Adani Power ‘is the only company allowed to do so through a power purchase agreement which has been very controversial… Now the company has been allowed to sell that electricity in India itself’.
It should be noted that Adani Power is the single largest privately-owned electricity company in India and the only one that benefits from the recent change in electricity export rules.
On 18 August 2024, Jawhar Sircar, another Opposition MP who, like Ramesh, is from the Rajya Sabha (the upper house of Parliament) but belonging to a different political party, the All India Trinamool Congress, based in West Bengal, Tweeted: ‘It’s clear that one grievance of the anti-India, anti-Hasina movement is (Sheikh) Hasina’s deal with Adani Group’s $1.7 billion power plant to buy power at a very high cost – to make Modi happy… Govt has not responded to my request for facts and details’.
To place the above Tweet in context, AdaniWatch spoke on condition of anonymity to a former High Commissioner of India to Bangladesh from the elite Indian Foreign Service who was posted in Dhaka. This person said the students who were out on the streets of Bangladesh protesting against the Hasina regime had made the Adani-BPDB agreement an important issue in their agitation. ‘Their voices were getting shriller by the day,’ the retired diplomat said.
Speaking to this correspondent over the phone from Khulna, environmental activist and secretary of the Bangladesh Working Group on External Debt, Hasan Mehedi, said he was ‘not surprised’ at the way the Indian government acted quickly to protect the interests of Adani. ‘New Delhi is more interested in the profitability of the Adani company than the interests of its smaller neighbour,’ Mehedi said.
Mehedi pointed out that the BPDP had not paid its dues to Adani Power for the months of April, May and June.
‘Such payment delays are not unusual in government-to-government agreements like the one between the BPDB and the Indian government-nominated Adani company,’ he said, ‘but the change in India’s guidelines on exports of electricity is clearly aimed at bailing out Adani.’
He added that from April 2023 onwards, the BPDP had been unsuccessful in negotiating with Adani to revise the rates downwards. Mehedi says that one of the 800 MW units at Godda was shut down on 15 August.
Senior journalist based in Delhi, Gautam Lahiri, who follows India-Bangladesh relations closely, told AdaniWatch that there is a serious balance-of-payments problem in Bangladesh. Banks in that country are facing a crisis and the interim government in Dhaka led by Nobel laureate Mohammad Yunus is not favourably inclined towards the Indian government, even if this is not said openly.
‘There is a view in Bangladesh that given its precarious economic condition, it should not pay anything more to Adani Power at this stage even it means reneging on an agreement that is said to be tilted in favour of Prime Minister Modi’s favourite industrialist, Gautam Adani,’ said Gautam Lahiri.
Lahiri said Sheikh Hasina left Dhaka when India’s Parliament was in session. ‘The Modi government should have come clean with its intention to change the electricity export rules but did not discuss the matter in Parliament,’ he said.
Many in Bangladesh and India argue that the BPDB-Adani agreement is ‘lopsided’ and was pushed through by then PM Hasina for political purposes even though it went against her own country’s direct economic interests.
‘There are several stakeholders in the scheme – the peoples of Bangladesh and India, the governments of the two countries and a private company; only one stakeholder gains and that is Adani,’ said B. D. Rahmatullah.
Rahmatullah served as Director General of the Ministry of Power in the government of Bangladesh. He is an engineer by profession and between 1995 and 2007 worked in various capacities in the BPDB and the Rural Electrification Board.
In an interview with AdaniWatch, Rahmatullah pointed out that he and many others have been publicly protesting against the BPDB-Adani agreement.
‘We have taken out processions on the streets of Dhaka and other cities, we have staged plays and sung songs in protest for nearly ten years, but we could not move Sheikh Hasina,’ he lamented, adding that he hoped the interim government led by Yunus would revise the country’s energy policy.
Echoing Rahmatullah’s sentiments, Matiur Rahman, the editor of Bangladesh’s most popular daily newspaper Prothom Alo (meaning First Light), told this correspondent that ‘all informed persons in Bangladesh knew that this agreement was agreed to by Sheikh Hasina to help Modi’s friend’. He said that discussions are occurring within the interim government as to whether the agreement should continue or not.
Incidentally, Rahman and his publication have been publicly described in Bangladesh’s Parliament as anti-national and anti-government by Hasina. The veteran editor was, at one stage, fighting 65 lawsuits instituted against him and his organisation, of which 42 are continuing.
‘From 2016 onwards, 49 advertisers, including Bangladesh government bodies and private companies, have stopped advertising in our paper, despite the fact that it is the most widely circulated daily in our country,’ he said.
Does Bangladesh need the electricity provided by Adani’s Godda project?
Regarding the question of whether Bangladesh needs Adani’s power, opinion is divided. Several persons, including Rahman, say the quality of electricity in his country is erratic and poor, with frequent outages, load-shedding and/or voltage fluctuations.
Whereas Bangladesh officially claims that it has installed power capacity of around 28,000 MW, Rahmatullah says around 10,000 MW capacity is effectively non-operational because of outdated equipment. Of the remaining 18,000 MW, peak demand accounts for about 12,000 MW. He adds that at least three new coal-based power plants are currently in operation or are being constructed at Paera, Banshkhali and Rampal – the last-named project is being executed in partnership with India’s public-sector NTPC.
Rahmatullah described Bangladesh’s energy mix. More than half (52%) of the power generated is based on natural gas, 36% uses liquid fuels as feedstock, around 3% is hydro-electric power, 3% is solar and wind energy, and the remaining 6% is coal-based. He argues that Bangladesh could do without electricity from Adani’s Godda plant. Other experts quoted in an article published by Al Jazeera in March 2023 argue that Godda power is needed as it is stable.
Should India be exporting electricity when it is itself short of power? Even in a coal-rich state like Jharkhand, around 40% of the population does not have electricity connections, compared with 12% for India as a whole. The per-capita average consumption of electricity in Jharkhand is around half the all-India average.
Background on how the Godda power plant became so contentious
There is no power project anywhere in the world like the Godda power plant. The highest reserves of coal in India are situated in the Jharkhand province, which is economically backward. Curiously, however, Adani’s Godda power plant does not use coal from the state where it is located. The coal used by the project travels in ships almost 9000 kilometres from the Abbot Point port in northern Australia to the Dhamra port in Odisha. Both the coal mine in Queensland and the port on India’s east coast are controlled by entities that are part of the Adani Group.
After arriving in Dhamra port, the coal is moved along leased railway lines to Godda located 600 km away. After electricity is generated from two units of the project (each with an installed capacity of 800 MW), it is transmitted over more than 100 km to Bheramara in Bangladesh, from where it redistributed.
These logistical incongruities are not the only reason why the project is controversial.
The way in which 172 ha of fertile farmland were acquired for the Godda power plant despite protests by the original landowners, most of them belonging to underprivileged tribal communities whose livelihoods were taken away or endangered after giving them negligible compensation; the way in which those opposed to the project in Godda, including Opposition politicians and local activists, were harassed and some of them arrested; the dirty tricks and coercive methods deployed to acquire land; and the ecological damage to the area – these have all been narrated in detail over several years by AdaniWatch, the ABC and other media.
AdaniWatch is the one single source of comprehensive information about the project and the controversies surrounding it, including the disclosure of the secret power contract between Adani Power and the BPDB that indicated how the latter had to pay three times more per unit of electricity than that charged by comparable power generators. Moreover, the agreement stipulates that Adani is paid by BPDB in US dollars, which have become scarce in Bangladesh in recent months.
Between March 2020 and January 2024, AdaniWatch published 19 detailed articles by Geoff Law, Abir Dasgupta, Ravi Nair and A. Abedin that have highlighted all aspects of the contentious project, including how rules were changed to declare the project area a special economic zone (SEZ) or an export-oriented ‘country within a country’ that is exempt from payment of taxes, how Bangladesh has been short-changed because Adani did not pass on its tax benefits to the BPDB, and how the state government of Jharkhand changed its own rules to allow the project to export its output.
Let us look at how the controversies of the Godda power plant have unfolded.
In December 2014, India signed a ‘framework agreement’ with the countries that come under SAARC (or the South Asian Association for Regional Cooperation), including Bangladesh. Modi visited Hasina for the first time as Prime Minister of India in June 2015. The same month, BPDB signed its agreement with the Adani Group. Whereas only public-sector companies such as the NTPC had been allowed to set up projects in neighbouring countries, the rules were changed.
The power contract that specifies how much power was to be supplied, at what rate and under what terms and conditions was signed by Adani and the BPDB when Hasina visited Delhi in November 2017. Experts have pointed out that, internationally, most PPAs have short lock-in periods in view of the volatility in energy markets. However, the Adani-BPDB agreement has a longish lock-in period of 25 years.
In 2016, the Indian government put in place guidelines that prohibited an area with a single, stand-alone power project to be declared a special economic zone (SEZ). These guidelines were amended in December 2018 and, a month and a half later, the Board of Approval for SEZs approved SEZ status for Adani’s Godda power project. This status had been rejected in 2018, prior to the rules being changed.
Subsequently, Adani Power was given a host of tax concessions – it was exempt from paying Customs duties on imported coal and power-generating equipment, exempted from paying goods-and-services tax, was allowed to stagger its payments of income tax on export profits, and exempted from paying a ‘clean energy’ cess paid by coal-based power projects. These concessions were not passed on to BPDB in the power contract, thereby giving the Adani company an enormous financial windfall.
In 2016, the Jharkhand state government, led by Chief Minister Raghubar Das, owing allegiance to the BJP (the right-wing, Hindu-nationalist political party to which Prime Minister Modi belongs), amended its energy policy that stipulated that any power plant located in the state would have to supply 25% of its output to consumers within the state. Adani’s Godda power plant was exempted from this requirement with Adani Power agreeing to supply this quantum from ‘alternate’ sources.
In 2019, the Indian government and the Jharkhand government agreed to a change in the environmental clearance granted to Adani Power and allowed the company to bring 36 million cubic metres of water from India’s holy river, the Ganga, for the power project by building a pipeline almost 100 km long.
In 2018, the international Institute of Energy Economics and Financial Analysis (IEEFA) published a report that described the Godda project as ‘too expensive’ and ‘too risky’ for Bangladesh, besides being an attempt to ‘prop up’ Adani’s Carmichael coal mining project in Australia. In May 2017, the Jharkhand State Accountant General raised questions about the ‘preferential treatment’ and ‘undue benefits’ given to the Adani Group’s Godda project.
After the completed power plant started transmitting power to Bangladesh in July 2023, Sheikh Hasina hosted Gautam Adani in Dhaka. A year later, and she has fled the country she led for two decades to become an exile in India.
The ‘export oriented’ Godda project will soon be selling power to buyers within India.
The story of Adani Power (Jharkhand) and the Godda power plant is not yet over.
