The Bangladesh government appointed National Review Committee report on Adani Power’s Godda coal fired project has opened a serious legal and contractual fault line that extends well beyond electricity pricing. At its core, the findings raise fundamental questions about public procurement integrity, cross border taxation principles, tariff setting norms and the enforceability of long term power purchase agreements under international commercial law.
This is no routine pricing dispute. The report characterises the Adani contract as the most significant statistical outlier in Bangladesh’s electricity import portfolio, alleging inflated tariffs, improper tax pass through and serious procedural anomalies in how the deal was awarded. For a project supplying more than ten percent of Bangladesh’s electricity, the implications are systemic rather than incidental.
Tariff structure and the legal meaning of ‘Overpricing’
According to the committee, electricity from the Godda plant was priced at nearly forty percent above the nearest comparable private sector supplier and roughly fifty percent higher than what the panel believes would be a reasonable benchmark. In legal terms, this allegation is critical because pricing in long term power purchase agreements is rarely judged in isolation. It is assessed against market comparables, risk allocation and the contractual choices embedded at the negotiation stage.
The report explicitly states that the price divergence is an outcome of specific contractual choices rather than external market shocks. This distinction matters. If elevated tariffs arise from fuel volatility or regulatory change, suppliers are typically protected through change in law or force majeure clauses. If, however, they arise from structurally unfavourable drafting, the door opens to renegotiation and in some cases legal challenge on grounds of public interest and fiscal harm.
Corporate tax pass through and departure from international norms
The most legally striking finding concerns the inclusion of Indian corporate taxes in the tariff charged to Bangladesh. The committee notes that standard international practice requires independent power producers to bear corporate tax liabilities in their home jurisdiction. By contrast, the Adani power purchase agreement appears to permit the recovery of Indian corporate taxes from the Bangladeshi off taker.
From a legal perspective, this is not a minor deviation. Corporate income tax is a sovereign obligation of the entity earning profits within a jurisdiction. Passing that burden to a foreign public utility effectively transfers a domestic fiscal obligation across borders without reciprocal benefit or legislative sanction. In public contract law terms, this raises concerns of unjust enrichment and improper cost allocation.
If substantiated, this provision could become the most vulnerable point of the agreement in any renegotiation or dispute resolution process. It also risks scrutiny under Bangladesh’s public finance accountability framework, where public funds must be expended in accordance with law and established norms.
Procedural anomalies and procurement law exposure
Equally consequential is the committee’s finding of serious anomalies in the procedures through which the contract was awarded. While the report stops short of alleging illegality, the language used signals potential breaches of competitive procurement principles.
In public procurement law, especially for strategic infrastructure projects, transparency, equal opportunity and value for money are not merely best practices. They are legal safeguards. Any deviation that results in excessive fiscal burden can invite judicial review, parliamentary inquiry or even criminal investigation depending on domestic law thresholds.
The fact that the committee has recommended a review of electricity contracts to identify provisions suitable for renegotiation suggests that the government is positioning itself for corrective action rather than immediate termination. This is a legally prudent approach, as outright cancellation of a long term power purchase agreement could expose Bangladesh to international arbitration claims.
Renegotiation versus arbitration: The legal fork ahead
The committee’s call for renegotiation reflects a careful balancing of legal risk. Power purchase agreements of this nature typically include arbitration clauses, often seated outside the host country and governed by foreign law. Any unilateral attempt to revise tariffs or disallow tax components could trigger a dispute under investment protection or contract law principles.
However, renegotiation grounded in documented fiscal harm and deviation from international norms offers a defensible pathway. If Bangladesh can demonstrate that certain provisions are inconsistent with public policy or were incorporated through flawed procedures, it strengthens its negotiating position without breaching the contract outright.
Adani Power’s response that it continues to supply electricity despite large unpaid dues adds another layer of legal complexity. Payment disputes, when combined with allegations of overpricing, often escalate into multi forum litigation involving domestic courts, regulatory bodies and international tribunals.
Cross border energy contracts and the rule of law
This episode underscores the legal fragility of cross border energy contracts in emerging markets. When sovereign buyers face domestic pressure over pricing and fiscal exposure, contracts that once appeared commercially sound can quickly become politically and legally contested.
For investors, the case highlights the importance of aligning tariff structures with international norms and insulating contracts from perceptions of preferential treatment. For governments, it reinforces the necessity of rigorous procurement processes and transparent cost benchmarking before committing public funds over decades.
A precedent in the making
The Adani Bangladesh power deal is no longer just a commercial arrangement. It is evolving into a test case for how developing economies reassess legacy energy contracts in an era of fiscal stress and heightened accountability.
Whether the outcome is renegotiation, regulatory intervention or arbitration, the legal reasoning applied here will be closely watched across South Asia and beyond. At stake is not only the price of electricity, but the credibility of public contracting, the limits of cross border tax pass through and the enforceability of power purchase agreements in the face of public interest scrutiny.
This is a legal moment that could reshape how governments and energy giants negotiate power, risk and accountability for years to come.