Adani Group has resumed full electricity exports to Bangladesh following increased demand during Ramadan. The company previously reduced operations due to significant overdue payments, but resumed its service after receiving a partial payment from Bangladesh. The power purchase agreement has faced scrutiny due to its financial terms, prompting calls for re-evaluation.
India’s Adani Group has resumed full-scale electricity exports to Bangladesh from its Adani Power Jharkhand Ltd (APJL) following a request linked to the demand surge during Ramadan. The APJL plant provided approximately 1,362 megawatts (MW) on Monday, utilizing a portion of its maximum 1,496 MW capacity, as reported by the Bangladesh Power Development Board (BPDB). This resumption comes as Bangladesh faces increased energy needs during both Ramadan and the summer months.
Previously, Adani had ceased operations for one of its power units on November 1, reducing its electricity supply to Bangladesh by half, due to an accumulated debt exceeding US$850 million. The company halted operations to apply pressure for payment, threatening to shut down the remaining unit unless the BPDB acted to settle the dues. However, following the BPDB’s payment of US$170 million via a letter of credit, Adani reinstated full operations.
The BPDB has reportedly been making payments of about US$85 million each month to Adani in order to mitigate the backlog of outstanding invoices. However, persistent dollar shortages within Bangladesh have complicated timely payments to various independent energy producers, including Adani. In response, the Indian conglomerate has proposed a resolution to settle the approximate US$800 million in overdue payments by June 2025, attempting to avoid penalties stipulated in the Power Purchase Agreement (PPA).
Adani has offered to forgo late-payment surcharges for the upcoming period between January and June 2025 if the BPDB adheres to timely payments and resolves the outstanding debts by June 30, 2025. The terms of the existing PPA specify a hefty 2.0 percent monthly surcharge on overdue amounts, which, when compounded, can reach an annual rate of approximately 27 percent.
The electricity purchase agreement has been contentious, recognized as a questionable deal from its inception when it was signed in November 2017. The deal establishes a 25-year contract for power supply through a dedicated 400kV transmission line. It has faced scrutiny, prompting Transparency International Bangladesh to recommend re-evaluation or potential cancellation of the contract with APJL.
In conclusion, Adani Group has resumed full electricity exports to Bangladesh, addressing urgent energy needs amid rising demand. Despite prior operational suspensions due to significant payment delays, recent payments from the BPDB have enabled resumed operations. The long-standing contract raises concerns regarding its terms, particularly given the financial implications of late-payment surcharges. The situation highlights ongoing challenges in managing cross-border energy trade and payment disputes.
Original Source: thefinancialexpress.com.bd
