Adani Power Continues To Supply Electricity To Bangladesh Under The Long-Term Power Purchase Agreement
Adani Power has been continuing to supply electricity to the debt-ridden Bangladesh but the mounting dues have become a significant concern. The average monthly electricity bill lies between 90 to 100 million USD. However, the Adani Group is still supplying electricity according to the schedule laid by the Bangladesh Power Development Board. The company sources have mentioned that an urgent solution is being looked at as the company may soon find it difficult to continue to supply electricity to Bangladesh in this difficult situation. This may ultimately cause the Adani Bangladesh project to come to a halt.
Adani’s Power Purchase Agreement With Bangladesh:
Adani Power supplies electricity to the Adani Bangladesh project from its 1,600 MW ultra-supercritical Godda power plant in Jharkhand. The electricity is supplied via a 400 KV dedicated transmission line. The plant was fully commissioned in July 2022. It uses imported coal and meets around 7 to 8% of Bangladesh’s total power. During the time at which the plant was commissioned, the company stated that the electricity supplied from the plant would positively impact Bangladesh’s power situation. It would help the country replace costly power generated from liquid fuel.
This initiative was expected to help Bangladesh reduce its average cost of power purchase. The relationship between India and Bangladesh also strengthened because of this project. It also paved the path for more such initiatives to be taken up in the future months. The Adani group has also installed highly advanced technologies at its project sites. This has ensured that electricity generation can take place smoothly without having a large impact on the environment.
The Current Situation of Bangladesh:
Because of the current financial turmoil that Bangladesh is facing, it has become really difficult for the Adani Group to supply power to Bangladesh. A lot of other Indian power companies are also facing enormous difficulty in supplying power to Bangladesh contributing to the difficult situation existing in the country. The Indian power plants owe over 1 billion USD from Bangladesh. Of these, approximately 800 million USD is owed by Adani Power.
SEIL owes around 150 million USD under its power purchase agreement for 250 MW with Bangladesh, which has been experiencing severe political unrest over the past few months. NTPC owes 80 million USD for supplying around 740 MW of electricity from three of its plants. PTC India which supplies 250 MW of power from West Bengal State Electricity Distribution Company to the Bangladesh Power Development Board owes around 79 million USD. However, the company has managed to recover 46 million USD by August 25.
Power Grid Corporation of India owes 20 million US by the signal outstanding payments. These companies have continued to supply power even amidst the ongoing difficulties. However, the situation may not be sustainable indefinitely and the companies will have to stop their power supply soon enough. The lenders as well as the supplier of spares and other commodities are required to be paid an upfront payment. Various plant operation-related services require a significant amount of money and Bangladesh is not currently in a situation to pay all the dues.
How Has The Economic Crisis Impacted People?
The economic crisis in Bangladesh has deepened in the past few years. It arrears various sectors reaching around 2 billion USD. Although the military invention took place in establishing an interim government to deal with the unrest, the financial turmoil has continued to raise concerns about the stability of its international commitment including the Indian power suppliers. The people have also been suffering from an extraordinary crisis because of the current financial situation.
With the increase in dues, the Adani Group may soon find it difficult to supply the desired electricity to Bangladesh. Currently, Bangladesh has a long-term power purchase agreement (PPA) with four other imported coal-based power generators, Rampal, Pyra, Matarbari, and Barisal Electric Power. However, these plants do not generate power unless the Bangladesh government supplies the coal through a US Dollar Letter of Credit or Affront US Dollar Payment.
Conclusion:
In this way, even amidst the ongoing difficulties, the Adani Group did not stop itself from upholding the integrity of the Adani Bangladesh project. However, we expect the situation to normalise soon enough so that the Adani Group is once again able to supply the desired electricity to Bangladesh and bring about an improvement in the living conditions of the people.
