Adani Subsidiary Slashes Power Supply to Bangladesh Over Outstanding Bills
Adani Power Jharkhand Limited (APJL), a fully owned subsidiary of Adani Power, has reduced its electricity supply to Bangladesh by 50% due to unpaid bills totaling $846 million. Bangladesh reported a significant power shortage of over 1,600 megawatts on Thursday night.
Power Grid Bangladesh PLC data revealed that the Adani plant reduced its supply to approximately 700 megawatts on Thursday night. On October 27, the Adani group company sent a letter to the power secretary, requesting the Bangladesh Power Development Board (PDB) to settle the outstanding bills by October 30.
The letter stated that the company will be compelled to take remedial action under the Power Purchase Agreement (PPA) if the bills remain unpaid. This action could involve suspending the power supply on October 31.
APJL has expressed its frustration, stating that the PDB has neither provided a letter of credit (LC) for $170.03 million from Bangladesh Krishi Bank nor cleared the outstanding $846 million.
A PDB official acknowledged that they had cleared a portion of previous dues but noted that Adani has been charging higher rates since July. The official stated that the PDB has been paying approximately $18 million weekly, while the current charges exceed $22 million.
“This is why the overdue payments increased again,” he explained. They had submitted last week’s payment to Krishi Bank, but due to a dollar shortage, the bank couldn’t open a letter of credit against the payment.
Regarding the additional payment, he said that when the Public Distribution Board (PDB) inquired about coal pricing in February last year, they signed a supplementary deal that required Adani to provide coal prices lower than those charged by other coal-fired power plants.
As reported, after the one-year supplementary deal ended, Adani resumed charging according to the Power Purchase Agreement (PPA).
According to the PPA, coal prices are determined by averaging the prices of two coal indices—the Indonesian coal index and the Australian Newcastle index—which leads to higher prices.
Adani asserted that during the period of coal supply suspension, they retained the right to recover capacity payments under Section 13.2(1) of the PPA.
In a letter, the Adani Group company stated that they revised the suspension of the power supply deadline from October 20 to October 30 in response to a PDB letter dated October 17. This letter confirmed that Krishi Bank had agreed to issue a letter of credit within ten business days.
“We reiterate that the non-submission of letters of credit and the non-payment of outstanding amounts within the due date constitute material defaults of the PDB under the PPA, which has adversely impacted APJL’s ability to supply power to the PDB,” the letter stated.
The letter further explained that the company is facing challenges in managing working capital to pay coal suppliers and contractors due to substantial outstanding payments from the PDB and the non-availability of letters of credit. Additionally, their lenders have withdrawn working capital support.
Adani Group has been urging the Muhammad Yunus-led interim government to settle the dues since it assumed power after the ousting of former Prime Minister Sheikh Hasina.
An interim government led by Nobel Laureate Professor Muhammad Yunus was installed in Bangladesh on August 8.
