$500 mn in overdue power debt not sustainable: Adani Group to Bangladesh

The power deal, signed under Sheikh Hasina leadership, involves the supply of coal-generated electricity from Adani's 1,600 MW Godda plant, which the Yunus govt claims is opaque and expensive

The Adani Group has issued a warning to Bangladesh’s interim government, led by Nobel Peace Prize laureate Muhammad Yunus, regarding overdue payments on a contentious power project, according to a report by The Financial Times (FT). 

Bangladesh has accumulated $500 million in unpaid dues, threatening to strain the early days of Yunus’s administration, which took over after student protests ousted former Prime Minister Sheikh Hasina.

Yunus’s government attributes the country's financial struggles to "opaque, expensive infrastructure deals", including a significant agreement with Adani Power. The deal, signed under Hasina’s leadership, involves the supply of coal-generated electricity from Adani’s 1,600-megawatt Godda plant in India.

 

Adani Power expressed concerns over the unsustainable nature of the mounting dues. The company told FT, “We are in continuous discussions with the Bangladesh government and have made them aware of the unsustainable situation we face in meeting both our supply commitments and obligations to lenders and suppliers, despite the rising receivables.”

Despite these challenges, Adani Power reaffirmed its commitment to providing Bangladesh with reliable and competitively priced power from the Godda facility, even as debts continue to mount.

Bangladesh’s total power liabilities have now reached $3.7 billion, with $492 million owed to Adani. The country’s total debt to the conglomerate could rise to as much as $800 million, the report added.

Yunus’s administration is working to secure international loans, including from the World Bank, to stabilise the country’s finances.

Adani Group's Godda plant power supply to Bangladesh

Adani Group has extensive investments across sectors such as ports, data centers, and energy in Bangladesh. The deal between Bangladesh and Adani for the Godda power plant was signed during Prime Minister Narendra Modi’s 2015 visit to Dhaka. 

The project, which became fully operational last year, has been criticised by activists for its high costs. They argued that importing power from the plant does not make financial sense for Bangladesh. However, Adani maintains that its pricing for power is "very competitive" compared to other coal-based power plants.

In response to the mounting debt, Yunus’s government plans to reintroduce competitive bidding for future infrastructure projects and re-examine deals made under the previous administration. This review will not only focus on Indian deals but also on those with China. Bangladesh’s government aims to negotiate more cost-effective terms for future projects, remaining open to partnering with any country offering the best value.

Bangladesh, the world’s second-largest garments exporter, has long struggled with energy shortages due to dwindling domestic gas reserves. As political unrest in the nation continues, many international clothing brands have turned to India for production, as earlier reported by Business Standard.

Electricity exporters to sell power domestically in India

Recently, the Indian government amended its guidelines to allow electricity exporters to sell power domestically, potentially enabling Adani to find alternative buyers for its Godda power plant. However, Adani stated that it has no plans to divert supplies away from Bangladesh, affirming its commitment to continue serving the country’s energy needs.