Bangladesh has asked Adani Power to fully resume supplies from its 1,600-megawatt plant in India, a Bangladesh official said, after more than three months of reduced sales with supplies halved due to low winter demand and payment disputes.
What Has Happened
Adani, which signed a 25-year contract under former Prime Minister Sheikh Hasina in 2017, has been supplying power from its $2 billion plant in India’s Jharkhand state. The plant, with two units each of 800 megawatts capacity, sells exclusively to Bangladesh.
The Indian company halved supply to Bangladesh on October 31 due to payment delays as the country battled a foreign exchange shortage. This led to the shutdown of one unit on November 1, resulting in the plant operating at about 42% capacity.
Subsequently, Bangladesh told Adani to keep supplying only half the power.
The state-run Bangladesh Power Development Board (BPDB) said it had been paying $85 million a month to Adani to clear outstanding dues and has now told the company to resume supply from the second unit.
BPDB and Adani officials were due to meet virtually on Tuesday following another meeting recently to work out various issues between them, said a source with direct knowledge of the matter who did not want to be named as he was not authorised to talk to the media.
In December, an Adani source said, BPDB owed the company about $900 million, while Karim said at the time the amount was only about $650 million.
Potential Negotiations
The pricing dispute revolves around how power tariffs are calculated, with the 2017 agreement pricing off an average of two indexes. Adani’s power costs Bangladesh about 55% more than the average of all Indian power sold to Dhaka, Reuters has reported.
A Bangladesh court has ordered an examination of the contract with Adani by a committee of experts, with results expected this month. This could potentially lead to contract renegotiations.
Last year, Bangladesh’s interim government accused Adani of breaching the power-purchase agreement by withholding tax benefits that the Jharkhand plant received from New Delhi, Reuters reported in December citing documents. Bangladesh officials also said they were reviewing the contract.
A spokesperson for Adani told Reuters at the time that it had upheld all contractual obligations with Bangladesh and had no indication Dhaka was reviewing the contract.
In November, U.S. prosecutors indicted Adani Group founder Gautam Adani and seven other executives for their alleged role in a $265 million bribery scheme in India. Adani Group has called the U.S. allegations “baseless”.
In September, the Bangladesh government appointed a panel of experts to examine major energy deals signed by Hasina, who fled to New Delhi in August after deadly student-led protests.
(With inputs from Reuters)
