Adani’s Recovery Amidst Financial Tensions
The Adani Group, one of India’s largest conglomerates, has faced a series of setbacks this year, including allegations of stock manipulation and accounting fraud. Despite these challenges, Adani has been working to restore its financial stability and reputation. However, recent developments in Bangladesh, where Adani Power Jharkhand Limited (APJL) supplies electricity, have complicated this recovery. Citing unpaid dues amounting to $846 million, Adani Power has reduced its electricity supply to Bangladesh, which is currently experiencing an energy shortage. The situation underscores the financial strain both the company and the country face, highlighting the importance of timely payments in maintaining international power agreements.
Reduced Power Supply Amid Financial Deadlock
Adani Power recently cut its supply to Bangladesh by 50% due to outstanding dues owed by the Bangladesh Power Development Board (PDB). The company, which normally supplies up to 1,496 megawatts (MW) through its Jharkhand plant, is now delivering only 700 MW as of Thursday night. This reduction comes at a critical time for Bangladesh, which reported an energy shortfall of over 1,600 MW overnight, creating added strain on the national grid.
On October 27, Adani sent a letter to the PDB, warning that failure to settle dues by October 30 would result in a suspension of power under the Power Purchase Agreement (PPA) starting October 31. The PDB has yet to make the necessary payments, and a $170.03 million letter of credit required for the agreement has also not been provided, according to Adani.
Rising Costs and Payment Discrepancies
The PDB’s financial struggles have worsened due to recent adjustments in coal pricing by Adani, which previously followed a supplementary agreement to keep prices lower. However, with the agreement’s expiration, coal prices are now calculated per the PPA, based on the more expensive Indonesian and Australian coal indices. This shift has increased Adani’s charges to more than $22 million per week, while the PDB has managed weekly payments of only $18 million, resulting in a mounting backlog.
Adani’s Appeal to Bangladesh’s Interim Government
Amid dollar shortages and financial strain, Adani Power has requested Bangladesh’s interim government to assist in settling outstanding payments. The company is entitled to capacity payments even while the power supply remains partially suspended, as outlined in Section 13.2(1) of the PPA.
A Strained Partnership
The recent power supply cut highlights the complexities in cross-border energy agreements, where financial strain on one side can disrupt critical services on the other. As Adani works to stabilize its business amid ongoing controversies, resolving this dispute with Bangladesh will be key to sustaining its international operations. The situation serves as a reminder of the importance of transparent agreements and financial commitments in ensuring reliable energy partnerships.
(With inputs from agencies)
