No power supply unless debts are paid by November 7: Adani to Bangladesh

After Adani cut power in Bangladesh due to unpaid dues, they have now set a deadline of November 7 to cut off the connection if there is no clarity on the amount owed beyond the outstanding amount owed, reports Times of India.

Bangladesh currently owes Adani nearly $850 million.

Adani has set a deadline of October 31 for the Bangladesh Power Development Board to clear dues and provide a letter of credit (LC) worth $170 million (about Rs 1,500 crore) to ensure payment security.

While BPDB did try to issue a letter of credit for the outstanding amount through Krishi Bank, the move was not in line with the terms of the power purchase agreement, a source told TOI. A lack of dollars was cited as one of the reasons.

This prompted Adani Power Jharkhand to cut supplies from October 31, worsening power shortages in Bangladesh. Adani’s power plant in Godda (Jharkhand) delivered 724 megawatts against an installed capacity of 1,496 MW on Friday, according to the latest report published on the Power Grid Bangladesh (PGB) website. The largest power supplier is Adani Power Jharkhand, followed by Payra (1,244 MW), Rampal (1,234 MW) and SS Power I (1,224 MW) power plants.

NTPC Bangladesh-India joint venture Friendship Power Company, owned by Rampal at Bagerhat and SS Power I, was already operating at less than half its capacity due to coal shortage, PGB’s daily report showed.

Industry sources told TOI that some power units have reduced fuel purchases as the crisis-hit country is unable to make payments on time. Payments from Bangladesh have been slower, resulting in higher contributions. It was reported that Adani Power was paid around $90 million in October, but in previous months the payments were around $20-50 million, with monthly bills of $90-100 million. The Jharkhand power plant supplies electricity at 10-12 baht per unit (Rs 7-8.50), with the cost linked to coal prices in Indonesia and Australia.

Adani has not commented on the matter, but senior executives had earlier told TOI that they were hopeful the dispute would be resolved. Delayed payments and, more importantly, lack of clarity have prompted India’s largest private power company to take the extreme step as it needs to repay creditors.

The decision to cut off supplies will also impact the viability of the Godda power plant as Bangladesh is the only buyer of power and Adani Power Jharkhand had to leave one of its two 800 MW units idle. Monthly bills of $90-100 million would translate into annual revenue of $1.1 billion (over Rs 9,000 crore) for the company.

Soon after the overthrow of Sheikh Hasina’s government in Bangladesh, Adani began exploring the possibility of supplying electricity to the domestic market, given the steady growth in demand and guaranteed payments. The company has been asked to find a connection to the local power grid, which can be done through a substation at Lakisarai in Bihar.