BANGLADESH Trends and Developments Contributed by: Arunima Dutta Aurni and M. Imtiaz Farooq, Farooq and Associates
was reduced, which also shortened the visible delay period. This has created a separate area of disagreement between BPDB and project companies. Several power companies have challenged the outage calcu- lations and liquidated damages deductions, including through proceedings before the High Court Division. Interim orders obtained in some of these proceedings appear to restrain further recovery or deduction during the relevant interim period, although the treatment of amounts already deducted remains a live issue. The practical result is that, for many operating pro- jects, the payment issue has evolved from delayed receivables into a broader dispute over availability, outage treatment and BPDB’s ability to adjust liqui- dated damages against monthly invoices. Renegotiation Pressure on Existing PPAs Another development during the transition period was pressure on certain operating power projects to revisit tariff arrangements under already-signed PPAs. These discussions appear to have taken place outside the ordinary contractual adjustment mechanisms con- tained in the project documents. Although no major legal challenge appears to have been brought by the project companies on this issue, the development raised concerns among sponsors regarding contrac- tual certainty and the stability of agreed tariff struc- tures. The issue has received less attention under the current government, and it remains unclear whether tariff rene- gotiation of existing projects will continue as a policy focus. For the sector, however, the point remains sig- nificant. Power projects are structured on the basis of long-term contractual revenue assumptions. Any attempt to reopen agreed tariffs, unless carried out under the express terms of the relevant project docu- ments or by mutual agreement, may affect investor confidence and the assessment of future projects. Disputes Under Existing PPAs The financial pressure in the sector has also started to appear in disputes under existing project agreements. The most prominent example is the dispute between BPDB and Adani Power under the cross-border power
purchase arrangement for supply of electricity from Adani’s coal-fired power plant in Jharkhand, India. The dispute concerns outstanding payments and tariff components under the long-term PPA, including the coal price used for calculating generation costs. It is significant because it shows how payment obliga- tions, fuel cost pass-through and long-term offtake commitments are now being more closely scrutinised. A notable development was the intervention of the High Court Division in a public interest litigation con- cerning the legality and possible irregularities of the underlying arrangement. The court stayed the arbitra- tion process until the committee formed to review the agreement submitted its report. This was unusual in the context of a signed PPA containing an interna- tional arbitration clause, as the contractual dispute resolution process was temporarily restrained through domestic court proceedings arising from a broader public interest challenge. The broader review process has since progressed, although the dispute resolu- tion process appears to be moving slowly. Meanwhile, payments have become more regular and the underly- ing agreement remains in force. For the wider power sector, the importance of the dispute goes beyond the immediate disagreement between BPDB and Adani Power. It highlights the increasing scrutiny of long-term power contracts and shows that disputes under existing PPAs may now involve not only contractual claims, but also public law challenges, committee reviews and questions of domestic court intervention. Project Pipeline and LOI Cancellation Disputes The revised procurement approach has also affected projects that were awarded but had not yet reached implementation. Many of these projects had received letters of intent under the Quick Enhancement of Elec- tricity and Energy Supply (Special Provisions) Act, 2010, but had not proceeded to commercial opera- tion. As part of the recent reform process, a number of LOIs issued for power projects have been cancelled. This has created uncertainty for sponsors who may have
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