Adani Power says India is not obligated to buy power from them even though the rules now allow companies with 100% power export contracts to sell domestically
Adani Power is committed to supply electricity to Bangladesh, Reuters reported citing a company statement, which added that the recent amendment to power export rules does not affect its existing contract.
Billionaire Gautam Adani speaks during an interview at his office in the western Indian city of Ahmedabad April 2, 2014. (Amit Dave/Reuters)
India introduced new rules for electricity producers who export their power, allowing them to sell in the domestic market too, in cases of consistent drops in offtake or payment defaults, according to a Bloomberg report, which added that this could benefit Adani Power’s 1.6-gigawatt Godda plant in Jharkhand, since it exports electricity to Bangladesh.
Why would Adani Power benefit from the new rules?
Adani Power’s Godda plant is the only one in India under contract to export 100% of its power to a neighbouring country.
The Godda plant has seen arrears piling up and payments coming with a lag of 4-5 months, according to the Bloomberg report.
The new rule could also potentially benefit future power projects where all output is locked into export contracts, by allowing the supplier to hedge using the domestic market.
However, the Reuters report quoted Adani Power as saying that though the amendment facilitates connectivity to the Indian grid, it does not impose any obligation on India to buy electricity.
When did the new rule come about?
This came nearly a week after Prime Minister Sheikh Hasina had to flee Bangladesh and seek refuge in India due to the massive protests triggered by government job quotas.
Though an interim government has been placed in Dhaka, risks of political uncertainty continue to persist.
