Adani pushes for payment roadmap as PDB arrears mount to $845m

Summary:

• Adani Group seeks $845M payment from Bangladesh for Godda power
• Bangladesh's PDB struggles with overdue power bills since 2023
• $771M of the total debt remains unpaid by PDB
• Disputes exist between PDB and Adani Power over claims
• Adani requests urgent meeting to resolve financial tensions in Dhaka

India's Adani Group has sought a clear roadmap from Bangladesh's interim government for settling $845 million in unpaid bills for power exported from its Godda plant.

In a letter dated 6 January, addressed to Finance Adviser Dr Salehuddin Ahmed and Power and Energy Adviser M Fouzul Kabir Khan, Adani expressed urgency in resolving the mounting arrears while also discussing future supply arrangements.

Confirming the receipt of Adani's letter, Fouzul Kabir Khan told TBS yesterday, "We owe them money, which is why they have sent a letter requesting the settlement of outstanding dues and to discuss related matters. This is a routine issue."

The $1.7 billion Godda plant, touted as a symbol of growing energy cooperation between Bangladesh and India, was expected to ease Bangladesh's power shortages. Instead, it now stands at the centre of a financial and diplomatic strain

The letter, seen by TBS, reads: "Since the commencement of power supply in 2023, the Bangladesh Power Development Board (PDB) has been unable to fully pay the invoices raised. Arrears have been accumulating month by month."

While recent months have seen improvements in PDB's payment patterns, Adani points out that these payments barely cover current monthly bills, leaving the staggering outstanding amount of $845 million, of which $771 million is overdue, untouched.

The situation is further complicated by disputes between the two sides. "Certain claims and counterclaims have been made between PDB and Adani Power (Jharkhand) Limited (APJL)," the letter notes, hinting at unresolved tensions.

Adani has called for immediate action, urging the Bangladesh government to facilitate a meeting in Dhaka to resolve all outstanding issues related to the power supplied by Godda.

The $1.7 billion Godda plant, touted as a symbol of growing energy cooperation between Bangladesh and India, was expected to ease Bangladesh's power shortages. Instead, it now stands at the centre of a financial and diplomatic strain.

Payment pressure growing

With Ramadan, the month of fasting, and Boro rice season approaching in March – periods of significantly higher power demand – the government faces mounting pressure to clear outstanding dues owed to both local private power companies and foreign suppliers like Adani.

In a meeting with Power Division Secretary Farzana Mamtaz at the secretariat on Tuesday, Local independent power producers (IPPs) urged the government to clear at least half of their outstanding dues within 10 days to prevent blackouts during Ramadan and the subsequent rice-growing season, which requires heavy irrigation.

During the meeting, Bangladesh Independent Power Producers' Association (Bippa) President KM Rezaul Hasanat said, "Approximately Tk18,000 crore in bills remain unpaid, with payment delays now exceeding six months, compared to the 45-day limit stipulated in contracts."

"Around Tk9,000 crore of the dues are owed to local companies. If at least half of this amount, Tk4,500 crore, is cleared by mid-January, it would enable timely imports of heavy fuel oil (HFO)," he said.

About half of the 9,000MW generation capacity operated by Bippa members depends on HFO-based power plants.

When asked about the overdue payments to local power producers, Energy Adviser Fouzul Kabir told TBS, "It is normal for the IPPs to demand their dues. I will meet with them, and we will discuss how to settle the payments."

Meanwhile, the Bangladesh Oil, Gas, and Mineral Resources Corporation (Petrobangla) has sent a letter to the finance ministry, warning that liquified natural gas (LNG) imports may be disrupted if due payments of around $470 million are not made to foreign suppliers on time.

Petrobangla officials told TBS that in the letter, the organisation urged the ministry to provide at least Tk5,000 crore from the subsidy allocation for LNG imports.

The letter also warned that failure to clear the arrears on time could result in suppliers halting LNG deliveries under long-term contracts. Additionally, supplier participation in open tenders for spot market LNG imports might decline, and late payments could lead to penalty interest.

However, according to Bangladesh Petroleum Corporation (BPC) sources, the company owes $70 million to foreign suppliers for fuel oil imports, but these are not considered arrears.

BPC Managing Director Md Amin ul Ahsan told TBS on Wednesday, "Currently, the BPC has no overdue debts to foreign suppliers. Due to the dollar crisis in December, some regular bills remained unpaid – the amount is approximately $60 to $70 million."