New Delhi: Bangladesh, which has been grappling with an energy supply for months is facing a serious electricity shortage due to Adani Power’s decision to cut electricity exports over outstanding dues of nearly $850 million.
With a November 7 payment deadline looming over the administration on one side and pressure from the industrialists and business houses on the other side, Bangladesh is rushing to meet its debt obligations to Adani Power, which exports power to Dhaka from its 1,600 MW Godda plant in Jharkhand State.
At the same time, Bangladesh’s garment sector, suffering from delays in delivery of their final products that account for 80% of the nation’s exports has been rerouting shipments through the Maldives instead of Indian ports, reflecting tense bilateral relations and supply chain disruptions.
Power Crisis in Bangladesh
Electricity shortages in Bangladesh have reached severe levels, impacting millions of residents and business houses, particularly in rural areas. Production in seven of Bangladesh’s coal-based power plants has fallen to around 3,199 MW from a potential 7,099 MW, partly due to foreign currency or dollar shortages affecting coal procurement.
Adani Power’s Godda plant, Bangladesh’s largest single power source, recently halved its output from 1,496 MW to 724 MW as Bangladesh missed an October 31 payment deadline. Despite efforts by the Bangladesh Power Development Board (BPDB) to secure a $170 million letter of credit, the terms did not align with the power purchase agreement, triggering Adani’s supply cut to half.
Since June, Bangladesh’s power sector has also struggled with gas shortages. Technical defects with one of the two floating storage and regasification units have limited gas imports to 600 million cubic feet per day, down from the usual 1,100 million, compounding the supply deficit as reported by the local media.
Bangladesh’s reliance on coal and gas imports has long rendered it vulnerable to global price swings and dollar shortages, especially since its foreign exchange reserves have been hit by rising import costs and inflationary pressures.
Currently, Bangladesh owes Adani Power around $846 million, a sum that has accumulated due to a combination of rising costs, currency depreciation, and an insufficient dollar supply. As payments fell from the usual $90-100 million per month to $20-50 million, Adani’s debt grew.
Adani’s power deal with Bangladesh, signed in 2015, was one of the many under Sheikh Hasina, which the current interim government has called opaque. A national committee is now reassessing 11 previous deals, including the one with Adani, which has often been criticised as expensive.
Besides Adani Power, other Indian state-owned firms also sell power to Bangladesh, including NTPC Ltd and PTC India Ltd. Power Development Board officials confirmed that partial payments of money owed to other Indian power suppliers are also being made.
