India’s industrialist Gautam Adani’s company ‘Adani Power’ has warned neighbouring Bangladesh that if the huge electricity bill of Rs 7200 crore is not paid by November 7, then the power supply will be completely stopped. This warning has further increased the problems of Bangladesh, which is already facing a serious economic crisis since Sheikh Hasina was forced to resign on August 5 this year.
On October 26, Adani Power wrote a letter to the Bangladesh Electricity Board asking to clear the outstanding bill. After this, the company halved the power supply to BPDB on Thursday and gave four days to Bangladesh to take a clear stand on paying one bill. According to several media reports, Adani Power has already started partial power cuts from August 31 in Bangladesh. Bangladesh has reported a power shortage of more than 1,600 MW on the intervening night of Thursday and Friday due to partial supply cuts. According to media reports, the effect of the cuts has started showing in the country and power is being cut for several hours.
Bangladesh gets power from Jharkhand
It may be noted that Adani Power Jharkhand Limited (APJL), a subsidiary of Adani Power, exports 1,600 megawatts (MW) of electricity from its Jharkhand plant to Bangladesh. The company has halved its electricity supply to Bangladesh after APJL cited dues of $846 million i.e. about Rs 7,200 crore. APJL sells electricity to Bangladesh which is produced in the Godda area of Jharkhand. The company started facing payment problems after the coup in Bangladesh.
Sources familiar with the matter said that it had set a deadline of November 7 for payment of the outstanding amount. Since the company generates electricity from imported coal, it is facing challenges in the supply of coal due to non-payment.
How bad it is?
Adani Power meets nearly 30 per cent of Bangladesh’s total power supply from its plant at Godda. Adani Power supplies electricity to Bangladesh through its two 800 MW capacity plants located in Jharkhand. Now the power of one unit has been completely stopped, while the other unit is giving only 500 MW of power. In this way, the supply of 1100 MW of electricity has been stopped.
Media reports add that the Bangladesh Power Development Board had asked Adani Power to give a guarantee of Rs 1500 crore for a new power supply, however, due to non-payment within the deadline, Adani Power has partially cut off the power supply to Bangladesh. Meanwhile, sources say that recently the process of payment to Adani Group was done, but due to a shortage of dollars in Bangladesh, the payment could not be made.
Power deal was signed in 2017
Adani Power Limited (APL) started exporting electricity to Bangladesh through its power project on 10 April 2023 after the company had signed a deal in 2017 to supply electricity to Bangladesh from the Godda power plant for 25 years under the Power Purchase Agreement.
After meeting former Prime Minister Sheikh Hasina last year, Gautam Adani even shared a picture on X where he wrote, “Honoured to meet Bangladesh Prime Minister Sheikh Hasina on the full load start and handover of the 1600 MW ultra super-critical Godda power plant. I salute the dedicated teams of India and Bangladesh, who commissioned the plant in a record time of three and a half years despite facing Covid.”
It may be noted that Adani Power Limited (APL) was started on 22 August 1996. It is India’s largest private sector thermal power producer. The company has a power generation capacity of 15,250 MW. Its thermal plants are in Gujarat, Maharashtra, Karnataka, Rajasthan, Chhattisgarh, Madhya Pradesh and Jharkhand. At the same time, there is a solar plant of 40 MW capacity in Gujarat. The company is a builder of coal-based supercritical thermal power projects registered under the Clean Development Mission (CDM) of the Kyoto Protocol.
Reason for the current crisis
According to the BBC, Bangladesh has been struggling to generate dollar revenues to pay for costly essential imports like electricity, coal and oil. Foreign currency reserves fell during months of student-led protests and political turmoil that ousted the Sheikh Hasina government in August.
The interim government which replaced her has sought an additional $3bn loan from the International Monetary Fund (IMF) in addition to its existing $4.7bn bailout package. Adani’s power deal with Bangladesh was one of the many under Sheikh Hasina, which the current interim government has called opaque. A national committee is now reassessing 11 previous deals, including the one with Adani, which has often been criticised as expensive.
Besides Adani Power, other Indian state-owned firms also sell power to Bangladesh, including NTPC Ltd and PTC India Ltd. Power Development Board officials confirmed that partial payments of money owed to other Indian power suppliers are also being made.
Bangladesh is restarting some of the gas-fired and oil-fired power plants to bridge the supply shortfall, although experts say it will increase the cost of power. With winter approaching, power demands on the grid are expected to ease as air conditioners are switched off.
Bangladesh is planning to commission its first nuclear power plant in December to diversify its energy mix. Built with Russian assistance, it is costing $12.65bn, mostly financed by long-term Russian loans, reports the BBC.
What happens now?
If the matter with Adani Power is not resolved then the company can stop supplying electricity to Bangladesh, thereby adversely affecting its economy. According to reports, due to the non-availability of coal, there has been a huge decline in the production of electricity in Bangladesh’s Rampal and Banskhali plants. Bangladesh is not able to buy more coal, because it already has dues to India, Indonesia, Australia and South Africa.
If the power crisis deepens further, then the biggest blow will be to its garment industry which contributes in a big way to Bangladesh’s economy. Garments and textiles contribute more than 12% to its GDP. Experts say that the decision to cut power supply will also impact the Godda plant’s viability as Bangladesh is the sole power purchaser.
