Adani Power Jharkhand Ltd has resumed electricity supply to Bangladesh, generating 1,362 MW after a request from the BPDB. Previously, operations were halted due to a US$850 million payment backlog. Ongoing negotiations aim to clear dues by June 2025 to avoid late fees. The deal’s controversial nature raises questions about the Power Purchase Agreement terms. Transparency International Bangladesh has called for a review.
Adani Power Jharkhand Ltd (APJL) has resumed its full-scale electricity operations and supply to Bangladesh, yielding approximately 1,362 megawatts (MW) of electricity from its total capacity of 1,496 MW as of Monday. This revival in operations comes after a request from Bangladesh, coinciding with the commencement of Ramadan. The Bangladesh Power Development Board (BPDB) had urged APJL to reinstate full operations to cater to increasing demand during the Ramadan and the approaching summer months.
The Indian conglomerate had previously reduced its output after shutting down one of its power units on November 1 due to an outstanding payment backlog amounting to around US$850 million. The potential closure of the second unit was averted after the BPDB made a payment of US$170 million through a letter of credit issued by Bangladesh Krishi Bank, easing the financial strain that had led to the initial shutdown.
In recent months, the BPDB has reportedly been making payments of approximately US$85 million monthly to APJL, which exceeded the regular monthly bill for electricity, in an effort to settle overdue amounts. Adani has pressed the BPDB to expedite these payments, although challenges have persisted due to a dollar shortage affecting payment to independent power producers.
To mitigate late fees associated with the overdue payments, Adani has proposed a resolution plan, allowing Bangladesh to settle outstanding dues—around US$800 million—by June 2025 without incurring a late-payment surcharge. Under the existing Power Purchase Agreement (PPA), a late-payment surcharge of 2.0 percent monthly applies to outstanding balances, remarkably compounding to an annual rate of roughly 27 percent.
The ongoing electricity purchase from APJL has been highly contentious since its inception due to concerns about the terms of the PPA. Although BPDB has sought adjustments to this agreement, previous requests have been unsuccessful. The power deal, established in November 2017, spans a 25-year duration and facilitates power transmission through a dedicated 400kV line connected to Bangladesh’s national grid. Transparency International Bangladesh has also recommended reviewing and potentially canceling the PPA with APJL, citing transparency and fairness issues.
In conclusion, Adani Power’s resumption of full electricity operations to Bangladesh marks a significant development amid ongoing financial negotiations and overdue payments. The renewed supply responds to heightened demand during Ramadan and the summer season. However, persistent challenges regarding payment structures and the controversial nature of the Power Purchase Agreement highlight the complexities of energy transactions between the two parties.
Original Source: thefinancialexpress.com.bd
