TL;DR:
- Adani Power threatens to cut off electricity supply to Bangladesh by November 7 if $850 million in unpaid dues aren’t settled.
- Bangladesh’s dollar shortage and non-compliance with power purchase agreement terms have led to reduced power supply since October 31.
- The Godda plant in Jharkhand, currently operating at half capacity, is Bangladesh’s largest power supplier, exacerbating the country’s energy crisis.
- Adani is exploring domestic power supply options in India due to payment issues and the recent change in Bangladesh’s government.
Adani Power, India’s largest private power company, has issued an ultimatum to Bangladesh, threatening to completely cut off electricity supply if outstanding dues of nearly $850 million are not settled by November 7. This development comes after Adani Power Jharkhand Limited (APJL) already reduced its power supply to Bangladesh by half on October 31, citing unpaid bills.
The Godda power plant in Jharkhand, operated by APJL, has been supplying electricity to Bangladesh under a Power Purchase Agreement (PPA) with the Bangladesh Power Development Board (BPDB). However, the mounting unpaid dues have strained this arrangement.
Key points of the situation:
- Adani Power had initially set an October 31 deadline for BPDB to clear the dues and provide a $170 million letter of credit.
- BPDB attempted to issue a letter of credit through Krishi Bank, but the move did not align with the PPA terms.
- Bangladesh’s ongoing dollar shortage has complicated efforts to settle the payments.
- The Godda plant’s supply has been reduced from its 1,496 MW capacity to 724 MW, exacerbating Bangladesh’s power shortage.
The reduction in power supply has significant implications for Bangladesh’s already strained energy sector. Other major power suppliers, including the Payra, Rampal, and SS Power I plants, are also facing operational challenges due to coal shortages and payment issues.
Industry sources reveal that Bangladesh’s payments to Adani Power have been inconsistent, with recent months seeing payments of $20-50 million against monthly bills of $90-100 million. October saw an increased payment of around $90 million, but it fell short of clearing the accumulated dues.
An Adani Power executive, speaking on condition of anonymity, stated, “We remain hopeful for a resolution, but the lack of clarity on payment settlement has forced us to take this step.”
The situation is further complicated by the recent change in Bangladesh’s government. Following the ouster of Sheikh Hasina’s administration, Adani Power has been exploring options to supply power to the domestic Indian market, given the steady demand growth and more reliable payment prospects.
This power supply crisis underscores the broader economic challenges facing Bangladesh, including inflation, currency devaluation, and a foreign exchange crunch. The potential complete cut-off of power from Adani could have far-reaching consequences for Bangladesh’s industries and overall economic stability.
As the November 7 deadline approaches, all eyes are on the Bangladesh government and BPDB to see how they will address this critical issue and secure the country’s power supply.
