Adani has cut power supply to Bangladesh by 50% due to a backlog in payments

India's Adani Power Jharkhand Limited (APJL) has halted half of its power supply to Bangladesh, citing unpaid bills. Data from Power Grid Bangladesh PLC indicated that the Adani plant reduced its output on Thursday night. The 1,496-megawatt facility is now generating approximately 700 MW from a single unit, which is affecting the national power production. Bangladesh reported a shortfall of over 1,600 MW last night.

Previously, Adani had contacted the power secretary, urging the Bangladesh Power Development Board (PDB) to settle the outstanding payments by October 30. In the letter, which was reviewed by *The Daily Star*, Adani warned that without payment, they would be forced to take remedial actions under the Power Purchase Agreement (PPA) by suspending power supply on October 31.

The letter, dated October 27, stated, "As you [the secretary] are aware, the deadline is fast approaching, and to date, PDB has neither provided a letter of credit (LC) for $170.03 million from Bangladesh Krishi Bank nor cleared the outstanding amount of $846 million."

A PDB official informed *The Daily Star* that while they had cleared a portion of previous dues, Adani’s charges have been higher since July. The official mentioned that the PDB has been paying approximately $18 million weekly, while the charges exceed $22 million.

"This has led to an increase in overdue payments," he explained, noting that they had submitted last week's payment to Krishi Bank, but the bank was unable to open a letter of credit due to a shortage of dollars.

Regarding the higher charges, he mentioned that after the PDB raised concerns about coal pricing in February of the previous year, they signed a supplementary agreement that required Adani to quote coal prices lower than those of other coal-fired power plants, such as Payra and Rampal.

After the one-year duration of this supplementary agreement, Adani has reverted to charging as per the original PPA. According to the PPA, coal prices are calculated based on the average prices of two coal indices—the Indonesian coal index and the Australian Newcastle index—which has led to increased costs. Adani’s letter reiterated its request for PDB to expedite payments of "material defaults" by October 30.

The letter also stated that Adani revised the deadline for the suspension of power supply to October 30 from October 20, following a PDB letter on October 17 that confirmed Bangladesh Krishi Bank would issue the LC within 10 business days.

"We reiterate that the failure to submit LCs and the non-payment of outstanding amounts by the due date constitute material defaults by PDB under the PPA, which have negatively impacted APJL's ability to supply power to PDB," the letter emphasized.

The letter further indicated that Adani has been facing significant challenges in managing working capital to pay coal suppliers and operational contractors due to substantial overdue payments from PDB and the unavailability of LCs, leading lenders to withdraw their working capital support.

Adani noted that during any suspension of supply, the company reserves its right to recover capacity payments under Section 13.2(1) of the PPA.

Adani has been urging the interim government to settle the dues since they assumed power. Gautam Adani, chairman of the Adani Group, also reached out to Chief Adviser Muhammad Yunus.