What's Happening?
Bangladesh has escalated its dispute with Adani Power Limited by appointing a British law firm, 3VP, to represent its state-run Power Development Board (BPDB) in mediation proceedings at the Singapore International Arbitration Centre (SIAC). The conflict
centers around coal pricing and power tariffs, with Adani Power claiming approximately USD 485 million in unpaid dues. This move follows arbitration initiated by Adani Power last year. The British firm, led by King’s Counsel Farhaz Khan, has been advising a national review committee on the Adani deal. The committee, which submitted its final report recently, has gathered evidence suggesting potential corruption in the agreement, which could support international legal proceedings. Bangladesh maintains that Adani Power is charging excessively high coal prices, increasing electricity generation costs. The dispute has intensified following the fall of the Hasina-led government in 2024, with the interim government considering canceling the power procurement contract if corruption is proven.
Why It's Important?
The outcome of this legal dispute could significantly impact Bangladesh's energy sector and its international trade relations. If Bangladesh successfully proves corruption, it may lead to the cancellation of the power procurement contract with Adani Power, potentially affecting the country's electricity supply and economic stability. Additionally, the case highlights the challenges developing countries face in negotiating fair terms with large multinational corporations. The involvement of international arbitration and potential legal proceedings could set a precedent for how similar disputes are handled in the future, influencing global business practices and international trade agreements.
What's Next?
The next steps involve the mediation process at SIAC, which is a mandatory but non-binding step before arbitration. If mediation fails, the case may proceed to arbitration, where the evidence gathered by the national review committee could play a crucial role. The interim government, led by Muhammad Yunus, may decide to cancel the contract if corruption is proven, which could lead to further legal battles and financial claims. The situation also calls for careful diplomatic handling to avoid straining Bangladesh's international relations, particularly with India, where Adani Power is based.
