Bangladesh reduces power purchases from India’s Adani amid payment dispute
Bangladesh has significantly reduced its power purchases from India’s Adani Power, cutting the supply in half due to lower winter demand and ongoing disputes over unpaid dues, government officials told Reuters on Monday.
Adani Power, which had already cut its supply to Bangladesh on October 31 due to delayed payments amid the country’s foreign exchange crisis, agreed to supply only half the amount for now. Despite the reduction, Bangladesh has committed to clearing its outstanding dues.
“We were shocked and angry when they cut our supply,” said Md. Rezaul Karim, Chairman of the state-run Bangladesh Power Development Board (BPDB). “Winter demand is now down, so we have told them there is no need to run both units of the plant.”
Adani Power has been supplying electricity to Bangladesh under a 25-year contract signed in 2017, with electricity coming from a $2-billion power plant in Jharkhand, India. The plant, which has two 800 MW units, ran at just 41.82 per cent capacity in November, its lowest output this year, with one unit shut down since November 1, a document seen by Reuters showed.
Last winter, Bangladesh imported about 1,000 MW of power per month from Adani, but now, despite Adani’s request for clarity on when regular purchases will resume, the BPDB has yet to provide a definitive answer.
An Adani Power spokesperson confirmed that supply is ongoing but expressed concern over the mounting dues, which are making plant operations unsustainable. “We are in constant dialogue with senior officials of BPDB and the government, who have assured us that our dues will be cleared soon,” the spokesperson said, adding confidence that Bangladesh will fulfill its obligations, just as Adani has honored its commitments.
Bangladesh’s outstanding payments to Adani are estimated at approximately $650 million, with payments of $85 million made last month and $97 million in October. However, an anonymous source from Adani revealed that the dues have now reached around $900 million, impacting the company’s debt profile and potentially increasing its financing costs.
Bangladesh has expressed its desire to reduce the power prices under the current agreement with Adani, unless the deal is canceled by a court. A court has already called for an investigation into the deal. Bangladesh’s power and energy advisor, Muhammad Fouzul Kabir Khan, noted that Adani charges the highest rates among all Indian suppliers to Bangladesh, with its cost per unit reaching 14.87 taka during the fiscal year ending June 30, 2024, compared to an average of 9.57 taka for other Indian suppliers.
The retail price in Bangladesh is 8.95 taka per unit, leading to an annual subsidy bill of 320 billion taka ($2.7 billion). Khan stated Because the prices are high, the government has to subsidise,” Khan noted. “We would like power prices, not only from Adani, to come down below the average retail prices.”
Attribution: Reuters
