Adani Power Warns of Supply Cut to Bangladesh Over $850 Million Unpaid Dues - Read Now

Adani Power Jharkhand Limited, a subsidiary of Adani Power, has warned Bangladesh that it will cease electricity supply if $850 million in paid dues pending from Bangladesh account is not cleared by November 7. The accounts of the pending bills have accumulated almost to $846 million according to The Times of India reports recently.

The Bangladesh Power Development Board (PDB) is said to be delaying payments, which will reportedly cut power supply. According to Power Grid Bangladesh PLC, the plant owned by Adani Power, with a 1,496MW capacity, reduced its production on Thursday night, causing a huge shortage of more than 1,600MW power in Bangladesh. Now, only one unit of the plant is operating and producing around 700 MW.

Cut in Power Supply and Billing Dispute
On 27 October, official communication was sent from Adani Power to PDB that it will withdraw supply as deemed obligatory of the Power Purchase Agreement (PPA) if payment is not made till 30 October. In spite of lapse of date, APJL has demanded Bangladesh to clear its dues by 7 November for a little window to pay. However, PDB was not able to fulfill the same due to delay in LC for $170.03 million due from Bangladesh Krishi Bank as there was a lack of adequate dollars.

Accumulated Dues and Payment Terms
The PDB has been paying around $18 million weekly, but costs have skyrocketed to more than $22 million. The arrears continue to grow. Krishi Bank, too, paid recently. However, due to the currency crisis in Bangladesh, the bank was unable to issue the required LC. This caused Adani Power to run short of the required power generation capacity at full scale. This situation has affected Bangladesh's direct power supply.

However, Adani has clarified that in case of suspension of power supply, it will still be entitled to receive capacity payments as envisaged under Section 13.2(1) of the PPA. When ex-Prime Minister Sheikh Hasina was ousted, Bangladesh formed an interim government with Nobel Laureate Professor Muhammad Yunus as Chief Adviser, after which Chairman of Adani Group, Gautam Adani made a complaint to Chief Adviser Yunus and demanded the government to make on time payments.

Possible Disruption in Bangladesh's Power Supply
This likely cut in power supply is the biggest issue for Bangladesh because its electrical demand is tremendous and the import volume is high. The deficit of power could cause frequent disruptions in electricity supply that may affect various industries, business houses, and the citizenry as well. The Bangladesh government and PDB are seen with expectant eyes on whether they could clear all the arrears till November 7 to escape a huge shock.

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