Adani seeks assistance from Md Yunus in addressing the financial strain caused by the unpaid power dues.
Adani Power, which has been supplying electricity to Bangladesh from its 1.6 GW coal-based plant in Godda, Jharkhand, since June last year, is currently facing a major financial challenge. The company, which delivers electricity through a dedicated transmission line, is owed $800 million by the Bangladesh Power Development Board (BPDB). This significant outstanding amount has prompted Gautam Adani, the chairman of the Adani Group, to seek the assistance of Muhammad Yunus, the chief advisor to the Bangladeshi government.
Adani Seeks Assistance from Md Yunus for Payment Clearance
In a letter dated August 27, Gautam Adani reached out to Muhammad Yunus with an urgent request for help in expediting the clearance of the $800 million owed by BPDB. Adani’s letter detailed the growing financial pressure from lenders, emphasizing the need for prompt action to resolve the issue. Adani wrote, “Our lenders have become stringent as we continue to meet our commitments to Bangladesh. I request your intervention for the prompt liquidation of $800 million of receivables from the Bangladesh Power Development Board.”
Adani’s appeal includes a request for the regular payment of routine bills to maintain financial stability while continuing to meet supply commitments. He has also asked for substantial monthly payments to address and reduce the outstanding balance effectively. The current financial strain is attributed to the fact that Adani Power is only receiving $40-45 million per month, despite a monthly receivable of $90-95 million, resulting in a significant buildup of unpaid dues over the past eight to nine months.
Challenges and Investments Highlighted by Adani
In his communication, Adani highlighted the extensive investment made by Adani Power in developing the state-of-the-art plant and transmission infrastructure. The $2 billion investment was completed in three and a half years, despite the severe disruptions caused by three waves of the Covid-19 pandemic. Adani emphasized the company’s ongoing commitment to Bangladesh’s energy security and infrastructure development.
The Adani Group has a 25-year power purchase agreement (PPA) with BPDB at a favorable tariff, as reported by Care Ratings. However, the disparity between the expected and actual payments has led to considerable financial strain. This situation underscores the critical need for intervention to resolve the payment issues swiftly.
Adani’s Broader Contribution to Bangladesh
In addition to the electricity supply issue, the Adani Group, through its subsidiary Bangladesh Edible Oil Ltd, plays a significant role in Bangladesh’s economy. The group operates oil refineries in Rupshi, Narayanganj, and Mongla, and runs an integrated facility in Bogra focused on rice packaging and rice-bran oil production. The group’s contributions to Bangladesh’s food supply include popular edible oil and premium rice brands such as Rupchanda, Meizan, and Fortune.
The Adani Group’s extensive involvement in various sectors in Bangladesh highlights its commitment to the country’s economic development. This broader engagement, coupled with the urgent need to resolve the payment issue, forms the basis of Adani’s appeal to Muhammad Yunus for timely intervention.
Adani’s request for assistance underscores the importance of resolving financial disputes to ensure the smooth continuation of business operations and the fulfillment of contractual obligations. The resolution of this payment issue will not only alleviate the financial pressure on Adani Power but also reinforce the company’s ongoing commitment to contributing to Bangladesh’s infrastructure and economic development.
The intervention sought from Muhammad Yunus is seen as a crucial step towards addressing these challenges and ensuring that the financial and operational commitments between Adani Power and BPDB are met satisfactorily. As the situation unfolds, the focus remains on expediting the payment process to maintain the stability of operations and uphold the integrity of the agreements in place.
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