Adani Power halts electricity supply to Bangladesh, reducing its output to 700 MW due to outstanding payments totaling USD 846 million. This supply cut, implemented by Adani Power Jharkhand Limited (APJL)—a subsidiary of Adani Power—has significant implications for Bangladesh’s energy sector. According to The Daily Star, the reduction in electricity provision has created a noticeable power shortage, with Bangladesh experiencing a deficit of over 1,600 MW. The 1,496 MW Adani Power plant is now operating with just one of its two units active, reducing its capacity to 700 MW
This supply reduction occurred after Adani Power issued a formal notice to the Bangladesh Power Development Board (PDB) on October 27, requesting that unpaid dues be settled by October 30. The letter warned that if payments were not cleared by this date, electricity supply would be suspended by October 31 under the terms of the Power Purchase Agreement (PPA). Bangladesh has faced rising electricity demands in recent years, which has led to increased dependency on international power suppliers like Adani Power. As a result, this move by Adani Power has raised concerns over energy stability and sparked discussions on financial constraints within Bangladesh’s energy market.
Rising Charges Lead to Unpaid Dues: Adani Power Halts Electricity Supply
A PDB official attributed the growing unpaid dues to increasing charges from Adani Power. While PDB had managed to clear some earlier payments, Adani’s weekly charges rose to over USD 22 million since July, but PDB has only been able to remit approximately USD 18 million per week. This shortfall has resulted in accumulating arrears, impacting the ability of PDB to meet its contractual obligations. Due to a shortage of foreign currency, a recent payment intended for Adani Power through Krishi Bank could not be processed, as the bank was unable to issue a necessary letter of credit, further complicating the situation.
The increasing costs associated with the Adani contract stem from the conclusion of a one-year supplementary agreement that had temporarily reduced coal prices. Once this agreement expired, Adani Power resumed pricing based on the original PPA terms, which calculate coal costs using indices from Indonesian and Australian coal markets. This adjustment led to a substantial rise in prices, creating an additional financial burden for PDB. Under the terms of the PPA, Adani Power has clarified that it retains the right to claim capacity payments even in the event of suspended electricity supply, underscoring the potential financial implications for PDB during this supply disruption.
The recent developments highlight both the challenges and dependencies within the Bangladesh energy sector. With coal prices driven by global indices, PDB’s capacity to pay remains influenced by international markets and currency availability. Adani Power’s halt in electricity supply to Bangladesh also raises questions about the reliability of foreign energy providers and the potential for local energy diversification. As PDB grapples with these increasing costs, the sector may explore new strategies to mitigate future dependencies and address long-term energy needs.
Gautam Adani Appeals to Bangladesh’s Interim Government
In addition to halting electricity supply, Adani Power has escalated the matter by engaging with Bangladesh’s interim government. Adani Group Chairman Gautam Adani recently reached out to interim government officials, including Nobel Laureate Professor Muhammad Yunus, in an attempt to address the overdue payments and discuss potential solutions. Gautam Adani’s appeal underscores the critical nature of these dues and signals the importance of resolving the issue to restore full electricity provision to Bangladesh.
This move also reflects Adani Power’s interest in maintaining a cooperative relationship with Bangladesh amid these financial challenges. By engaging directly with government representatives, Adani Group has opened a channel for potential discussions on managing future payments, revisiting pricing structures, or considering alternative arrangements to stabilize power supply. It remains to be seen whether the intervention by Adani’s top leadership will yield progress in negotiations or prompt policy adjustments within Bangladesh’s energy procurement framework.
The impact of Adani Power’s decision to cut electricity supply is already being felt across Bangladesh. Given the 700 MW reduction, energy-intensive sectors such as manufacturing, healthcare, and infrastructure are particularly vulnerable to disruptions. The situation has highlighted the delicate balance between affordable energy access and the contractual obligations that providers like Adani Power are expected to meet. For Bangladesh, this episode may prompt a reevaluation of energy procurement practices, including an assessment of the role of foreign power suppliers and potential policies to secure energy resources within its borders.
Adani Power Halts Electricity Supply Amid Broader Energy Challenges
This development comes at a time when global energy markets are experiencing volatility due to geopolitical tensions, supply chain disruptions, and shifting demand dynamics. Bangladesh’s reliance on Adani Power and other foreign energy providers underscores its vulnerability to global energy price fluctuations. With Adani Power halting electricity supply, Bangladesh faces an urgent need to secure alternative sources or address the outstanding dues to restore full power availability.
The implications of Adani Power’s supply cut extend beyond immediate power shortages. The financial pressures facing PDB reflect the broader economic challenges posed by high energy costs and limited foreign currency reserves. In response, Bangladesh’s government and PDB may explore options to stabilize energy costs, such as renegotiating terms with existing suppliers, developing new partnerships with regional energy providers, or expanding renewable energy initiatives within the country. Renewable energy projects, including solar and wind, could offer a viable path for reducing dependency on imported energy while addressing long-term environmental sustainability goals.
As Bangladesh navigates these challenges, Adani Power’s involvement has sparked a debate over the balance between international investment and national energy security. Adani Group’s engagement with the interim government signals a willingness to collaborate, but the financial complexities underscore the importance of clear, sustainable agreements that align with both business interests and the energy needs of the Bangladeshi population. With energy demand expected to rise further, sustainable procurement practices and robust contingency plans will be crucial to managing the country’s energy infrastructure in the years ahead.
In conclusion, Adani Power halts electricity supply to Bangladesh in response to unpaid dues, a decision that underscores the financial and operational challenges facing both parties. As the situation evolves, it highlights the need for effective energy management strategies and greater self-reliance in Bangladesh’s power sector. The outcome of this case will likely influence future energy contracts and shape the landscape of international energy cooperation for Bangladesh.
You might also be interested in – Gautam Adani overtakes Mukesh Ambani to become the richest Indian on the Hurun list; See the complete list here
