Bangladesh has formally requested that Adani Power fully restore electricity supplies from its 1,600-megawatt plant in Jharkhand, India, following more than three months of reduced power sales. According to a Bangladesh official, supplies were halved due to low winter demand and ongoing payment disputes.
Adani Power, which entered into a 25-year contract with Bangladesh in 2017 under the leadership of former Prime Minister Sheikh Hasina, has been supplying electricity exclusively to Bangladesh from its $2 billion plant. The plant, which has two units of 800 megawatts each, has been a significant energy source for the country.
However, in October, Adani reduced its supply to Bangladesh by 50% following payment delays due to Bangladesh’s foreign exchange shortage. On November 1, the plant’s first unit was shut down, causing the plant to operate at only 42% of its capacity. This led to Bangladesh requesting that Adani maintain supply at the reduced level until payment issues were resolved.
The Bangladesh Power Development Board (BPDB) has been paying Adani $85 million per month to settle outstanding dues. BPDB Chairperson Md. Rezaul Karim confirmed that the payment process is ongoing, and the BPDB is working to pay more in an effort to reduce overdue amounts. “As per our requirement today, they have planned to synchronize the second unit, but due to the high vibration, it didn’t happen,” Karim said, referencing technical issues that prevented the restart of the second unit on Monday.
In response to these issues, BPDB and Adani officials are expected to meet virtually to discuss further solutions and resolve the ongoing disputes.
In December, Adani sources stated that BPDB owed the company approximately $900 million, while Bangladesh officials suggested the figure was closer to $650 million. The disagreement has been largely centered around how power tariffs are calculated, with Adani’s electricity costing Bangladesh approximately 55% more than the average price for Indian power sold to Dhaka. The 2017 contract between the two parties is under scrutiny, as Bangladesh continues to examine the terms under which the deal was made.
The contract dispute has intensified following a Bangladesh court’s decision to form a committee of experts to review the agreement. Results of the examination are expected later this month, and could potentially lead to renegotiations of the contract.
In addition to the pricing dispute, the Bangladesh government has accused Adani of withholding tax benefits that the Jharkhand plant received from the Indian government. These accusations were made by Bangladesh’s interim government following deadly student-led protests in the country last year. In response, Adani denied any wrongdoing, asserting that it had upheld all contractual obligations with Bangladesh.
The situation is further complicated by recent legal challenges. In November, US prosecutors indicted Adani Group founder Gautam Adani and seven other executives in connection with a $265 million bribery scheme in India. The Adani Group has dismissed the allegations as “baseless.”
The ongoing energy dispute between Bangladesh and Adani highlights the complexities of international energy contracts, with both technical and financial challenges contributing to the strained relationship. As negotiations continue, the future of the energy supply agreement remains uncertain.
