Adani Power has agreed to fully restore supply from a 1,600 MW India power plant to Bangladesh in a few days after a gap of three months but has rejected Dhaka’s request for discounts and tax benefits, two sources told Reuters.

Billionaire Gautam Adani’s company halved supply to Bangladesh on October 31 due to payment delays as the country battled a foreign exchange shortage. This led to the shutdown of one of the two equal-sized units of the plant on November 1, followed by Bangladesh’s request to keep supplying only half the power, citing low winter demand and as the payment issue bubbled.

Ahead of summer demand and on Bangladesh Power Development Board’s (BPDB) request, Adani Power has agreed to resume full supplies by next week, said the two sources who had direct knowledge of the matter but declined to be named as they were not authorised to talk to the media. The plant in eastern India sells only to Bangladesh.

Adani Power, however, has not agreed to meet several other demands from BPDB, including giving discounts and concessions potentially worth millions of dollars to Bangladesh, said the sources. The two sides had a virtual meeting on Tuesday and more are likely to carry on the discussions.

“They don’t want to give up on anything, even $1 million,” said one of the sources, referring to Adani Power. “We have not got any concessions. We want a mutual understanding, they are invoking the power purchase agreement.”

BPDB Chairperson Md. Rezaul Karim did not respond to questions about the differences. He told Reuters earlier this week that “now there is no big issue with Adani” and that full power supply was going to begin, while he tried to step up payments beyond $85 million a month.

An Adani Power spokesperson did not immediately respond to a request for comment. The company said in a statement following a Reuters story on Tuesday that “dispatch of power by a power generator is dependent on the procurers’ requirements, which keep changing”.

In December, an Adani source said BPDB owed the company about $900 million, while Karim said at the time the amount was only about $650 million. The pricing dispute revolves around how power tariffs are calculated.

BPDB earlier wrote to Adani Power seeking tax benefits worth millions of dollars and resumption of a discount programme that ran for a year until May.

Gautam Adani, Chairman, Adani Group.
| Photo Credit: ANI

Bangladesh has halved the power it buys from Adani Power, citing lower winter demand, government officials told Reuters on Monday (December 2, 2024), amid disagreements over dues running into hundreds of millions of dollars.

Adani, whose founder has been accused by U.S. authorities of being involved in a bribery scheme in India, charges which he has denied, halved supply to Bangladesh on Oct. 31 over payment delays as the country battles a foreign exchange shortage.

Subsequently Bangladesh told Adani to keep supplying only half the power for now, officials said, although it will keep paying its old dues.

“We were shocked and angry when they cut our supply,” said Md. Rezaul Karim, chairperson of the state-run Bangladesh Power Development Board (BPDB). “Winter demand is now down, so we have told them there is no need to run both units of the plant.”

Adani has been supplying power under a 25-year contract signed in 2017 under ousted Prime Minister Sheikh Hasina, from a $2-billion power plant in Jharkhand that has two units, each with capacity of about 800 megawatts.

A document seen by Reuters showed the plant ran at only 41.82% capacity in November, the lowest this year, with one unit shut since Nov. 1.

Two BPDB sources said Bangladesh had bought about 1,000 MW a month from Adani last winter, adding that Adani had asked the board when it would resume normal purchases, but had not received a definitive answer.

An Adani Power spokesperson said the firm was continuing supply to Bangladesh, although mounting dues were a significant concern, making plant operations unsustainable.

“We are in constant dialogue with senior officials of BPDB and the government, who have assured us that our dues will be cleared soon,” said the spokesperson.

The firm was confident Bangladesh would fulfil its commitments, just as Adani had upheld its contract obligations, he added.

Mr. Karim said Bangladesh owed Adani about $650 million, and paid about $85 million last month and $97 million in October.

An Adani Power source, speaking on condition of anonymity, said the dues had jumped to about $900 million, hurting its debt profile and risking a higher cost of funds.

Bangladesh wants to sharply lower prices under the Adani deal, unless it is cancelled by a court, which has called for an investigation into it, the de facto minister for power and energy told Reuters on Sunday.

The Adani Power spokesperson said the firm had no indication that Bangladesh was reviewing its power purchase pact.

Adani charges the highest rate of all Indian suppliers to Bangladesh, a government document seen by Reuters showed.

Its cost per unit was 14.87 taka during the fiscal year that ended on June 30 2024, compared with an average of 9.57 for all Indian suppliers.

The retail price in Bangladesh is 8.95 taka a unit, leading to an annual power subsidy bill of 320 billion taka ($2.7 billion).

“Because the prices are high, the government has to subsidise,” said Muhammad Fouzul Kabir Khan, Bangladesh’s power and energy adviser. “We would like power prices, not only from Adani, to come down below the average retail prices.”