Bangladesh's Summit reviews cross-border power agreements after India's rule change

The chairman of Bangladesh's Summit Group said that the company plans to renegotiate initial deals to import renewable energy from India, after New Delhi recently changed its rules to allow generators who exclusively export their power to sell it locally.

India changed its power export regulations less than a month after Sheikh Hasina, the Prime Minister of Bangladesh, fled early this month amid deadly demonstrations. This allowed Adani Power's Godda coal fired plant to be connected to India's national grid. It is the only station that has a contract to export its entire output.

After the policy change my partners in India may be more willing than before to sell in India. Summit Group Chairman Aziz Khan said that the company would be investing in transmissions in Bangladesh, and they will have to take on more risk.

Last year, the conglomerate that operates more than a dozen fossil-fuel-based power plants signed preliminary agreements with Indian partners, including Tata Renewable Energy Ltd, to build and source 1,000 megawatts of renewable projects.

Tata Power's spokesman declined to comment about Summit's plans.

Imports of green power are essential for Bangladesh to reduce emissions. The country gets almost 99% its electricity from fossil-fuels. The lack of land in this densely populated country with over 170 millions people has limited the addition of solar power.

Summit Power International (Singapore-based holding firm for Summit Group’s power generation assets) is exploring various options, including delaying investment until more policy clarity is achieved and renegotiating the financial terms in order to reflect higher risks, Khan explained.

Khan, in reference to India's new rule, said that such rapid changes are always concerning because they have long-term consequences.

The new government in Bangladesh also poses uncertainty to Summit's plans for importing clean electricity via India, from the 700 megawatts hydro power plants that it planned to construct in Bhutan and Nepal.

Khan stated that no final decision has been made on cross-border investment, but the company will continue to invest in Bangladesh.

Khan also said that the decision of the new Bangladeshi government to suspend a rule allowing power supply contracts to be awarded without tenders was a factor in his decision to review project. (Reporting and editing by Sudarshan Varadhan)

(source: Reuters)