Adani Power Reduces Bangladesh’s Electricity Supply by 50% Over $846 Million Unpaid Bills

The reduction in power supply is a serious setback for Bangladesh, especially as the country recently reported an overnight power deficit exceeding 1,600 megawatts (MW). This shortage highlights the strain on Bangladesh’s power grid, which has been struggling to meet rising demand. The Adani plant, with a full generation capacity of 1,496 MW, is currently operating at reduced output, generating just 700 MW from one of its two units. The plant’s limited operation exacerbates the power shortfall, placing additional pressure on an already strained grid, leading to further concerns about load shedding and its impact on citizens and industries.

Adani Power Jharkhand Limited (APJL), a subsidiary of Adani Power, has reduced its electricity supply to Bangladesh by 50%, citing outstanding payments totaling $846 million as the primary reason, according to local media sources. Reports from Power Grid Bangladesh PLC confirm that the plant’s output reduction began on Thursday night, impacting power availability nationwide. The Daily Star noted this cutback, which compounds Bangladesh’s energy challenges by limiting its access to a reliable power source. This reduced supply from Adani has raised concerns about Bangladesh’s energy security, as the nation relies on stable power imports to keep up with demand.

In a formal warning to the Bangladesh Power Development Board (PDB), Adani indicated that this reduction could have been avoided if dues had been settled promptly. The company issued a letter on October 27, urging the PDB to clear the outstanding amount by October 30 to prevent disruption. The letter stressed that if payments were not made, Adani would be compelled to reduce or halt the power supply according to the Power Purchase Agreement (PPA) starting on October 31. This communication highlighted the company’s need to enforce its contractual rights in light of the PDB’s payment delays, which threaten the continuity of the agreement. The letter underscores the importance of timely payment, as Adani had forewarned the PDB of potential disruptions if dues were not resolved, adding urgency to the financial strain on Bangladesh’s power sector.

The letter further pointed out that the Bangladesh Power Development Board (PDB) had not fulfilled a key financial obligation specified in their agreement: issuing a $170.03 million letter of credit through Bangladesh Krishi Bank. This letter of credit is a critical component of the financial arrangement, serving as a guarantee of payment for Adani Power Jharkhand Limited (APJL). Without it, Adani faces greater financial risk, as the letter of credit would secure funds in the event of payment delays. The letter also emphasized that, beyond this missing letter of credit, the PDB had yet to address the much larger outstanding balance owed to Adani, adding to the mounting financial strain. This unmet payment obligation compounds the risk for Adani, creating significant uncertainty over whether the company will receive the payments necessary to continue supplying power at agreed levels. The omission of both the letter of credit and the broader settlement further underscores the financial tension between the two entities, with Adani pressing for compliance to prevent a worsening of the supply cutbacks that impact Bangladesh’s energy supply stability.

A PDB representative shared that although the board has settled portions of previous dues, a recent price adjustment by Adani has significantly increased costs since July. The PDB has been paying approximately $18 million per week; however, Adani’s charges have now risen to over $22 million weekly, creating a mounting backlog.

An earlier supplementary agreement had kept coal prices low until it expired, after which Adani reverted to calculating coal prices based on the PPA. This calculation method uses a blend of coal indices from Indonesia and Australia’s Newcastle, further increasing costs for the PDB amid dollar shortages and financial pressures.

In recent months, Adani has appealed to Bangladesh’s interim government for a resolution on these payments. The company has indicated that, per Section 13.2(1) of the PPA, it retains the right to collect capacity payments even during periods when supply is suspended.

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