Bangladesh is currently facing a pressing power supply crisis stemming from significant payment disputes with India's Adani Power, which has led the company to drastically reduce its electricity exports to the nation. With reports indicating around $800 million owed by Bangladesh to Adani, the urgency of the situation prompted the Bangladeshi government to expedite the payment process, aiming to clear outstanding debts and prevent any potentially dire power shortages.
According to officials, the Bangladesh Power Development Board has been actively processing partial payments to Adani Power, which supplies around 10% of Bangladesh's electricity from its 1,600 megawatt coal-fired plant located in India. Recent statements from the Bangladesh government suggest they have issued letters of credit amounting to $170 million to address the financial commitments to Adani, as they seek to avert any complete supply cuts.
This situation escalated recently when Adani Power decided to cut its electricity exports to Bangladesh by half due to increasing payment delays. The company's warning indicated it would cease all supplies if Bangladesh failed to settle the dues by November 7. Although officials from Bangladesh expressed confidence about resolving the payment issues, they were also taken aback by the sudden reduction in supply.
Efforts to ramp up repayments have seen the country increase payments incrementally, starting from $35 million back in July to $97 million by October. Interviewed officials one stated, “We have addressed payment glitches and already issued letters of credit to Adani group.” The interim government emphasized its commitment to regularize the payments moving forward, attempting to restore the full power supply from Adani Power.
The background of this dispute is complex and intertwined with Bangladesh's current economic struggles. The nation has encountered hardships generating sufficient dollar revenues necessary for paying for costly imports, including electricity, coal, and oil. Recent political instability, marked by student-led protests and the ousting of the Sheikh Hasina government, has compounded economic woes, driving the interim government to seek additional financial assistance from the International Monetary Fund (IMF).
Adding to the existing tensions, the power deals made under the previous administration, including the agreement with Adani, have faced scrutiny. The new interim leadership has deemed them opaque and too costly. A national committee has been tasked with reviewing various past agreements, signaling potential reevaluations of such partnerships moving forward.
While Bangladesh explores multiple strategies to circumvent the current energy crisis — including restarting some of its gas-fired and oil-fired power plants — experts warn of the financial burdens this would incur. Amidst rising energy costs and dwindling coal reserves, the country depends heavily on Adani’s relatively expensive electricity imports.
Dr. Ajaj Hossain, an energy expert, explained, “Other coal-fired plants are running at 50% capacity and the country is unable to buy enough coal owing to the dollar crisis, so it is important to continue ready-made power supply from Adani. It is marginally more expensive than local producers but it is a keep supply.”
New measures taken by the interim government include re-evaluations of domestic projects as well as potential dialogues with alternative independent power producers to mitigate the reliance on Adani Power. Alongside these adjustments, Bangladesh prepares to commission its first nuclear power plant, expected to begin operations by December, aiming to stabilize its energy mix and reduce dependence on imports.
The current outages and negotiations indicate the mounting pressures around energy supply amid global energy transitions. With winter approaching and power demands projected to ease, the government remains hopeful of resolving the outstanding matters with Adani. After all, the stakes are high, and timely agreements are deemed effective to avoid portraying vulnerabilities amid global scrutiny on energy security and economic performance.
