Adani cuts power supply to Bangladesh by over 60% on payment dispute

India's Adani Power has further reduced electricity supply to Bangladesh as it seeks around $850 million in dues, Reuters reports citing data from Bangladesh's grid operator and two sources familiar with the move.

Adani Power, which exports electricity to Dhaka from its dedicated 1,600 megawatt (MW) Godda plant in eastern India's Jharkhand state, had reduced supply this month to 700-750MW from around 1,400-1,500MW in early August.

Late on Thursday, supply was further reduced to about 520MW, according to Power Grid Bangladesh data and an official with the Bangladesh Power Development Board (BPDB).

At 2pm on Friday, Bangladesh got only 516MW, as per Power Grid Bangladesh data.

"We are gradually paying the dues and will take alternative measures if anyone stops the supply. We will not let any power producer hold us hostage," Muhammad Fauzul Kabir Khan, power and energy adviser, told Reuters on Thursday.

Meanwhile, Bangladesh has decided to clear dues of Adani power through the issuance of a new LC worth $173 million, reports Economic Times, quoting government sources.

"This is the third LC the Bangladesh Power Development Board [BPDB] has provided Adani Power. Bangladesh's Krishi Bank has given the LC, and ICICI Bank is its counterpart in India. The earlier LCs were not in line with the power purchase agreement," said an official aware of the development.

"Adani Power has additionally demanded a payment of $15-$20 million from BPDB, failing which the company will not restart the first unit of 800MW, which it shut down last week," said the official.

Reuters on 4 November reported that Bangladesh is accelerating payment to Adani Power. 

"Last month, we cleared $96 million, and this month, a letter of credit has been opened for an additional $170 million," the report said, quoting energy adviser Fouzul Kabir Khan. 

Adani Power did not respond to queries from Reuters on the reduction in power supply and details of payments made by Dhaka.

The power supply has been gradually reduced based on demand from Bangladesh as well as keeping payment dues in mind, a source at Adani Power told Reuters.

Adani meets 10% of Bangladesh's electricity needs. The 25-year power purchase agreement (PPA) with BPDB was signed in 2015.

"Payment from BPDB is trickling in as Bangladesh has been granted a loan from the International Monetary Fund [IMF]," said an industry official.

Between July and October, payment due to Adani Power was around $400 million, and Bangladesh paid less than half of it, said the official.

Monthly payments for power supply due to Adani Power amount to around $95-97 million.

Adani Group chairman Gautam Adani had written to Muhammad Yunus, the chief adviser to the Bangladesh government, this September seeking his intervention in the early liquidation of nearly $850 million of receivables to the power producer.

The company wrote to the BPDB again last month, requesting payment of the dues by 30 October and warning that failure to clear the bills would result in suspension of the power supply by 31 October under the PPA.

In addition to Adani Power, SEIL, NTPC Ltd, and PTC India Ltd also sell power to Bangladesh.