The Godda project was reportedly put on hold in May 2017 due to environmental concerns, specifically about the proposed plant’s water use and water take from the Chir river. The project also requires land acquisition and has faced significant opposition from those at risk of losing land to Adani.
An Adani executive recently stated that electricity exports to Bangladesh should begin before the next national Indian elections, which are due by May 2019. That schedule seemed overly hopeful given that Adani still has not secured the land needed to build the project or finalised finance.
The Godda project will deliver the people of Bangladesh one of the most expensive sources of new generation capacity available, failing to alleviate poverty as promised by Adani.
Bangladesh needs to increase its electricity supply, but the proposed Adani Godda project is not the answer: IEEFA’s analysis finds that it is too expensive and a poor strategic fit for Bangladesh.
The cost-plus Godda electricity contract, signed with the state-owned Bangladesh Power Development Board, is clearly designed to benefit Adani and is, at least in part, an attempt to prop up Adani Enterprises’ troubled Carmichael coal project in Australia. Carmichael was intended to produce coal for Adani’s own power plants, predominantly for its economically distressed Mundra plant. Instead, it appears that the Godda project will use Australian coal to export power to Bangladesh, locking Bangladesh into an expensive, long-term, and emissions-intensive source of electricity for decades to come.
Despite what Adani claims, the project will not only fail to alleviate poverty in Bangladesh, it will actually deepen it, in a country amongst the most vulnerable to the impacts of climate change. The proposal will produce high-cost power whilst cheaper, deflationary clean energy production is currently transforming India’s electricity system.
Adani Power intends to construct a net 1,496 megawatt (2 x 800 MW less 6.5% internal plant use) coal-fired power plant at Godda in India’s Jharkhand state and run the facility with imported coal from Adani’s Australian Carmichael coal project. The electricity would be shipped via a dedicated 400 kilovolt DC transmission line to Bangladesh. The plant will cost an estimated US$2.1 billion (Rs135bn), but where the funding will come from is entirely opaque given that Adani Power’s net debt of US$7.2 billion is more than 16 times equity. The company has so far failed to make the full cash deposit required to secure land acquisition for the project. In a move that is strategically illogical, Adani intends to import coal into Jharkhand, a major coal mining state that is home to the largest coal reserves in India.
IEEFA identifies several issues with the Adani Godda project that make it unsuitable for Bangladesh:
This tariff estimate is also much higher than what is being charged by other imported coal-fired plants; Adani’s import coal-fuelled Udupi power plant in Karnataka had an average PPA realisation of Rs4.80 per kWh in Q3 of FY2018. Indian state-owned power generator NTPC’s current average tariff for domestic sourced thermal power is Rs3.21/kWh. In addition, in February 2018 NTPC won a competitive tender to export power to Bangladesh – power that will be far cheaper than that from Adani’s Godda proposal and which makes much more sense for Bangladesh. Adani Australia chief executive Jeyakumar Janakaraj has stated that the supply of coal from its Carmichael coal mine project to the Godda power plant will help bring millions of Bangladeshis out of poverty. The very high cost of the estimated Godda tariff makes clear that this project will not alleviate poverty in Bangladesh - it will deepen it.
Signing a 25-year PPA for coal-fired power would lock Bangladesh into expensive electricity with high emissions at a time when cleaner, cheaper alternative sources of energy are rapidly being deployed across India.
Bangladesh’s current energy plan focuses on the construction of a domestic fleet of power plants running on imported coal and LNG. These efforts have not progressed well and much of the construction is already badly behind schedule. The country also hopes to boost electricity imports from neighbouring countries. In IEEFA’s view, Bangladesh would be best served by expanding its domestic solar capacity where possible and securing increased technology-agnostic electricity imports from neighbouring countries procured by competitive tenders. India can ramp up exports now using existing generation capacity – building new export capacity when the current thermal fleet is running at an average utilisation rate of just 57% is inefficient and expensive.
Please view full report PDF for references and sources.