Bangladesh promises over Rs 1,450 crore to Adani to ensure continuous power supply amid tense stand-off
By Shweta Kumari | First Published Nov 8, 2024, 1:54 PM ISTThe Bangladesh Power Development Board (BPDB) has issued a fresh letter of credit (LC) valued at $173 million (over Rs 1,450 crore) to Adani Power, to ensure uninterrupted electricity flow from its Jharkhand-based coal plant.
The Bangladesh Power Development Board (BPDB) has issued a fresh letter of credit (LC) valued at $173 million (over Rs 1,450 crore) to Adani Power, to ensure uninterrupted electricity flow from its Jharkhand-based coal plant. This financial step comes in the wake of Adani Power's drastic cut to electricity supply—slashing output by half—and its ultimatum to cease all power transmission over outstanding dues of $843 million (over Rs 7,000 crore).
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“This is the third LC that the Bangladesh Power Development Board has provided Adani Power. Bangladesh’s Krishi Bank has given the LC and ICICI Bank is its counterpart in India. The earlier LCs were not in line with the power purchase agreement,” shared an official close to the matter, reported Economic Times.
Adani Power, through its Godda plant in Jharkhand, supplies nearly 1,600 megawatts (MW) of electricity to Bangladesh, with each of its two units producing around 800 MW. The energy giant has now added further pressure on the BPDB, demanding an additional $15-20 million to restart one of the 800 MW units, which was shut down last week.
“Adani Power has additionally demanded a payment of $15-20 million from BPDB failing which the company will not restart the first unit of 800 MW which it shut down last week,” noted an industry insider.
For Bangladesh, Adani Power's contribution is critical, meeting approximately 10% of the country’s electricity demand. It stems from a 25-year power purchase agreement (PPA) signed in 2015. Despite recent financial turbulence, payments have slowly begun to trickle in, attributed to a loan from the International Monetary Fund (IMF), according to an industry official.
However, between July and October alone, Adani Power’s dues surged to around $400 million, with Bangladesh managing to settle less than half of this amount. Monthly payments to Adani range between $95-97 million, but Bangladesh’s dwindling foreign currency reserves, coupled with political upheaval and the ousting of the Sheikh Hasina government in August, have hampered its ability to meet these obligations.
The new interim administration has now sought an additional $3 billion loan from the IMF to support its struggling economy, adding to an existing $4.7 billion bailout package.
In September, Adani Group chairman Gautam Adani personally appealed to Muhammad Yunus, the chief advisor to the Bangladesh government, urging him to expedite the release of nearly $850 million owed to the power giant. In an urgent follow-up last month, Adani Power warned BPDB that failing to settle its dues by October 30 would lead to a full suspension of power supply under the PPA by October 31.
In addition to Adani Power, other energy players like SEIL, NTPC Ltd, and PTC India Ltd are also key electricity providers to Bangladesh, underscoring the pressing need for stable foreign reserves to secure power supplies and prevent potential energy crises.
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