Bangladesh Accelerates Payments to Adani Power Amidst Supply Cuts

Bangladesh is increasing its payments to Adani Power, an Indian conglomerate, following a reported halving of electricity supplies, which is attributed to an outstanding $800 million bill. According to two senior government officials who spoke to the BBC, partial payments are currently being processed for Adani, a company that provides 10% of Bangladesh’s electricity. A senior official from the Bangladesh Power Development Board informed the BBC, “We have addressed payment glitches and already issued a $170 million [£143m] letter of credit to Adani group.” Adani provides power to Bangladesh from its 1600 megawatt coal-fired plant located in eastern India. The company has not yet responded to inquiries from the BBC regarding the reductions in its supply to Bangladesh, a nation that frequently experiences power shortages. Officials indicate that the company has issued a threat to halt all supplies unless the outstanding funds are settled by November 7. However, the Bangladesh Power Development Board official stated they did “not believe it would not come to a stage where full supplies are cut off.” Bangladesh officials conveyed to the BBC their intention to make payments incrementally and consistently, expressing confidence in resolving the current payment crisis. Fouzul Kabir Khan, who serves as the energy adviser to the interim government, remarked, “We are shocked and surprised that despite us ramping up payments, supplies have been cut. We are ready to repay and will make alternate arrangements, but will not let any power producer hold us hostage and blackmail us.” He further stated that Bangladesh increased its repayments from $35m in July, to $68m in September, and then to $97m in October. The nation is currently experiencing exacerbated power shortages in its rural regions. Bangladesh has faced difficulties in generating dollar revenues required to fund expensive essential imports such as electricity, coal, and oil. Foreign currency reserves declined over several months due to student-led protests and political unrest that led to the removal of the Sheikh Hasina government in August. The subsequent interim government has requested an additional $3bn loan from the International Monetary Fund (IMF), supplementing its current $4.7bn bailout package. The power agreement between Adani and Bangladesh, established in 2015, was among numerous deals made during Sheikh Hasina’s tenure, which the present interim government has characterized as lacking transparency. A national committee is presently reviewing 11 prior agreements, including the one with Adani, which has frequently drawn criticism for its high cost. In addition to Adani Power, other Indian state-owned companies, such as NTPC Ltd and PTC India Ltd, also supply power to Bangladesh. Officials from the Power Development Board verified that partial payments are also being processed for outstanding amounts owed to these other Indian power providers. Bangladesh is reactivating certain gas-fired and oil-fired power plants to compensate for the supply deficit, though experts caution that this action will likely raise electricity costs. As winter approaches, the demand for power on the grid is anticipated to decrease with the deactivation of air conditioners. Dr. Ajaj Hossain, an energy expert and retired professor, commented, “Other coal-fired plants are running at 50% capacity and the country is unable to buy enough coal owing to the dollar crisis, so it is important to continue readymade power supply from Adani. It is marginally more expensive than local producers but it is a crucial supply.” Bangladesh intends to inaugurate its inaugural nuclear power plant in December as part of an effort to diversify its energy sources. Constructed with Russian support, the plant carries a cost of $12.65bn, primarily funded by long-term Russian loans.