Bangladesh seeks full power supply restoration from Adani plant
Adani, which signed a 25-year contract under former prime minister Sheikh Hasina in 2017, has been supplying power from its $2 billion plant in India's Jharkhand state
Highlights:
- Bangladesh asks Adani to resume full power supply as arrears are being cleared
- Bangladesh says paying Adani $85 million/month in dues
- Full power resumption was due on Monday but got delayed by technical issues
- A Bangladesh official says 'Now there is no big issue with Adani'
Bangladesh has asked Adani Power to fully resume supplies from its 1,600-megawatt plant in India after more than three months of reduced deliveries, a Bangladesh official said, when supplies were halved due to low winter demand and payment disputes.
Adani, which signed a 25-year contract under former prime minister Sheikh Hasina in 2017, has been supplying power from its $2 billion plant in India's Jharkhand state. The plant, with two units each of 800 megawatts capacity, sells exclusively to Bangladesh.
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The Indian company halved supply to Bangladesh on 31 October due to payment delays as Bangladesh battled a foreign exchange shortage. This led to the shutdown of one unit on 1 November, resulting in the plant operating at about 42% capacity.
Subsequently, Bangladesh told Adani to keep supplying only half the power.
The state-run Bangladesh Power Development Board (BPDB) said it had been paying $85 million a month to Adani to clear outstanding dues and has now told the company to resume supply from the second unit.
"As per our requirement today, they have planned to synchronise the second unit, but due to the high vibration, it didn't happen," BPDB Chairperson Md Rezaul Karim told Reuters, referring to some technical problems that stopped the unit from restarting on Monday.
"Right now, we are making a payment of $85 million per month. We are trying to pay more, and we intend to reduce the overdue. Now there is no big issue with Adani," Rezaul said.
An Adani Power spokesperson did not immediately respond to a request for comment.
Payment dispute
In December, an Adani source said BPDB owed the company about $900 million, while Rezaul Karim said at the time the amount was only about $650 million.
The pricing dispute revolves around how power tariffs are calculated, with the 2017 agreement pricing off an average of two indexes. Adani's power costs Bangladesh about 55% more than the average of all Indian power sold to Dhaka, Reuters has reported.
A Bangladesh court has ordered an examination of the contract with Adani by a committee of experts, with results expected this month. This could potentially lead to contract renegotiations.
Last year, Bangladesh's interim government accused Adani of breaching the power-purchase agreement by withholding tax benefits that the Jharkhand plant received from New Delhi, Reuters reported in December citing documents.
Bangladesh officials also said they were reviewing the contract.
A spokesperson for Adani told Reuters at the time that it had upheld all contractual obligations with Bangladesh and had no indication Dhaka was reviewing the contract.
Rezaul has not replied to Reuters' questions on whether the two sides have resolved their differences.
In November, US prosecutors indicted Adani Group founder Gautam Adani and seven other executives for their alleged role in a $265 million bribery scheme in India.
Adani Group has called the US allegations "baseless".
In September, the Bangladesh government appointed a panel of experts to examine major energy deals signed by Hasina, who fled to New Delhi in August after deadly student-led protests.
