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.

Representative image
| Photo Credit: Reuters

India’s Adani Power Jharkhand Limited (APJL), a wholly-owned subsidiary of Adani Power, has stopped half of its power supply to Bangladesh because of outstanding bills of $846 million, according to a local media report on Friday (November 1, 2024).

Data from Power Grid Bangladesh PLC showed the Adani plant reduced supply on Thursday (November 1, 2024) night, The Daily Star newspaper said.

Shortfall of more than 1,600 megawatts

Bangladesh reported a shortfall of more than 1,600 megawatts (MW) on the intervening night of October 31 and November 1 as the 1,496 MW plant is now producing 700 MW from a single unit, the newspaper reported.

Earlier, the Adani company wrote to the power secretary asking the Bangladesh Power Development Board (PDB) to clear its outstanding dues by October 30.

The letter, dated October 27, said that if the bills are not paid, the company shall be constrained to take remedial action under the Power Purchase Agreement (PPA) by suspending the power supply on October 31.

The company said that the PDB has neither provided a letter of credit (LC) for an amount of $170.03 million from Bangladesh Krishi Bank nor cleared the outstanding amount of $846 million.

The newspaper quoted a PDB official as saying that they had earlier cleared a portion of previous dues, but since July, Adani has been charging more than the previous months.

He said the PDB has been paying around $18 million weekly, while the charge is more than $22 million.

“This is why the due payments increased again,” he said, adding that they had submitted last week’s payment to Krishi Bank as well, but due to a dollar shortage, the bank failed to open a letter of credit against the payment.

About the additional payment, he said, when the PDB raised a question on the coal pricing in February last year, they signed a supplementary deal that obliged Adani to quote coal prices less than the rates charged by the other coal-fired power plants.

After the tenure of the one-year supplementary deal, Adani has again started charging as per the PPA, the report said.

According to the PPA, coal prices are calculated based on the average price of two coal indices, the Indonesian coal index and the Australian Newcastle index, which increases the prices.

Also read: Citing examples on how government ‘helped’ Adani Group, Congress demands JPC probe

Adani said that during the period of suspension of supply, the company reserves its right to recover capacity payments under Section 13.2(1) of the PPA.

Adani has been pressing the interim government to pay the dues since they took charge after the ouster of then prime minister Sheikh Hasina.

An interim government led by Nobel Laureate Professor Muhammad Yunus was installed in Bangladesh on August 8. Gautam Adani, chairman of Adani Group, also wrote to Chief Adviser Yunus.