Bangladesh Pushes for Full Power Supply Restoration from Adani Plant
Bangladesh urges Adani Power to fully restore electricity supply after months of reduced output due to payment issues and seasonal demand.
Bangladesh Calls for Full Resumption of Power Supply from Adani Plant
Bangladesh has formally requested Adani Power to restore full electricity supply from its 1,600-megawatt power plant in Jharkhand, India, following a prolonged period of reduced transmission. This development comes after over three months of restricted supply, triggered by a combination of seasonal demand fluctuations and financial disputes, according to officials from the Bangladesh Power Development Board (BPDB).
Adani Power, which operates under a 25-year contract signed during the tenure of former Prime Minister Sheikh Hasina in 2017, has been exclusively supplying power to Bangladesh from its $2 billion facility. The plant, featuring two 800-megawatt units, has played a crucial role in Bangladesh’s energy sector but has faced operational challenges in recent months.
Supply Cuts Amid Payment Delays
The energy dispute escalated on October 31, when Adani Power slashed its electricity supply to Bangladesh by half, citing delayed payments. Bangladesh, grappling with a severe foreign exchange shortage, struggled to meet financial obligations, leading to the shutdown of one of the plant’s two units on November 1. This caused the facility’s overall operational capacity to plummet to approximately 42%.
In response, the BPDB initially directed Adani Power to maintain the reduced supply while addressing the payment backlog. BPDB Chairperson Md. Rezaul Karim stated that Bangladesh has been paying $85 million per month towards settling outstanding dues and has now instructed Adani Power to restart the second unit to ensure an uninterrupted energy flow.
“As per our requirement today, they have planned to synchronize the second unit, but due to high vibration, it didn’t happen,” Karim explained, referring to technical issues that prevented the unit from restarting as scheduled.
Financial Disputes and Pricing Challenges
The standoff between Bangladesh and Adani Power is not just about overdue payments but also involves disagreements over power pricing mechanisms. The 2017 contract between the two entities set electricity prices based on an average of two pricing indexes. Reports indicate that electricity from Adani’s plant costs Bangladesh approximately 55% more than the average rate of other Indian power imports.
Furthermore, Bangladesh’s High Court has ordered an expert review of the contract, with findings expected to be released later this month. This review could potentially pave the way for renegotiating the terms of the power purchase agreement to make it more financially viable for Bangladesh.
Allegations and Contract Scrutiny
Compounding the issue, Bangladesh’s interim government has raised concerns over Adani Power’s compliance with contract obligations. In December, reports surfaced indicating that Adani had allegedly withheld tax benefits provided by New Delhi to its Jharkhand plant, which should have been passed on to Bangladesh under the terms of the agreement. The BPDB has been conducting a review of the contract to determine whether Adani met its financial and operational obligations.
However, an Adani spokesperson dismissed these allegations, asserting that the company has adhered strictly to all contractual commitments. As of now, neither party has disclosed whether these disputes have been fully resolved.
Broader Implications for Bangladesh’s Energy Strategy
This ongoing power supply issue highlights broader challenges in Bangladesh’s energy sector, particularly its reliance on external electricity sources. With growing energy demands and increasing financial constraints, the government is exploring ways to diversify its energy portfolio, including ramping up investments in renewable sources such as solar and wind power.
In light of these developments, Bangladesh has also initiated a comprehensive review of major energy contracts signed in recent years. A government-appointed panel is scrutinizing deals struck under former Prime Minister Sheikh Hasina’s leadership, including those with India-based energy firms.
Legal Troubles for Adani Group
Adding another layer of complexity to the situation, Adani Group has been embroiled in legal challenges. In November, U.S. prosecutors indicted the company’s founder, Gautam Adani, along with seven executives, over alleged involvement in a $265 million bribery scheme in India. While Adani Group has strongly denied the allegations, calling them “baseless,” the controversy could impact the company’s global operations and business dealings, including its energy contracts in Bangladesh.
What’s Next?
As Bangladesh continues negotiations with Adani Power, the focus remains on ensuring energy security while balancing financial sustainability. The expert review of the power contract, expected this month, could determine the next steps in Bangladesh’s energy policy, potentially leading to renegotiations or even diversification of power import sources.
For now, the immediate priority is restoring full power supply to avoid potential disruptions in Bangladesh’s electricity grid. How swiftly Adani Power can resolve technical issues and resume full operations will be critical in determining the stability of Bangladesh’s energy sector in the coming months.
The dispute between Bangladesh and Adani Power underscores the complexities of international energy agreements, highlighting the economic and political factors that influence power supply. As Bangladesh moves toward energy security, resolving financial disputes, reviewing contracts, and exploring alternative energy solutions will be vital in shaping the country’s future energy landscape. Whether the current negotiations will lead to a sustainable resolution remains to be seen, but one thing is clear—Bangladesh is determined to secure a stable and affordable energy supply for its growing economy.
Source: (Reuters)
(Disclaimer: The information in this article is based on publicly available data and reports. Details may be subject to change, and readers are advised to refer to official sources for the latest updates.)
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