New Delhi: Adani Power’s decision to halve the power it supplies to Bangladesh from its Jharkhand plant over unpaid dues could not only lead to electricity disruption in the country but also hurt its industry, according to analysts tracking the developments. This is despite the fact that Adani Power accounts for less than 10 percent of Bangladesh’s power requirement.
The reason for this is that Bangladesh has been having trouble procuring coal and natural gas for its own power plants, leaving it unprepared to handle the shortfall due to Adani Power’s decision.
Another factor is that the northern region of Bangladesh is more dependent on the power from Adani than the southern region, and so is likely to see more disruptions.
And while the disruptions are expected to be relatively fewer as winter approaches due to lower power demand, the country could fall into “dire straits” come March-April 2025 as summer approaches.
In addition, the knock-on effects could significantly hurt the country’s industry and exports, analysts said.
“Adani Power has cut its output to Bangladesh by 50 percent over unpaid dues,” a person involved in the proceedings confirmed to ThePrint on condition of anonymity, adding that Bangladesh owes Adani Power around $850 million in unpaid dues.
“Bangladesh is fast-tracking the payments, but as of now, that’s where we stand,” he added. “The company has given Bangladesh a 7 November deadline by which a line of credit is to be opened for $170 million. Failing this, the company will have to decide the way forward.”
Bangladesh imports power only from India, according to the latest annual report of the Bangladesh Power Development Board, of which the Adani Group’s Jharkhand plant at Godda provides the lion’s share. This ultra super-critical thermal power plant is also the only one in India where 100 percent of its capacity is contractually tied to exports.
Adani Power Jharkhand Limited (APJL), a wholly-owned subsidiary of Adani Power, in 2017 signed a power purchase agreement with the Bangladesh Power Development Board to supply 1,496 MW net capacity power from its Godda plant for a period of 25 years through a 400-kV dedicated transmission system connected to the Bangladesh grid.
While several reports have emerged that Adani Power is also considering completely cutting off supply to Bangladesh, ThePrint has learnt that this could hurt the company since it currently has nowhere else to sell the power from its Godda plant.
ThePrint reached the Adani Group for a comment via email and calls. This report will be updated if and when a response is received.
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Low dependence on Adani’s power, but caught unprepared
According to the Bangladesh Power Development Board, imports from Adani Power accounted for 6 percent of the total power capacity in the country in 2022-23, the latest period for which there is data.
The official cited above confirmed that this did not vary much, and has stayed between 7-10 percent since the supplies began.
“Adani’s power accounts for 7-10 percent of the country’s requirement,” the official said. “However, the northern region of the country is more dependent on Adani power than the southern region, and so we can expect some disruption there.”
According to Ijaz Hossain, former dean of engineering at Bangladesh University of Engineering and Technology (BUET) and a prominent energy specialist in the country, the actions by Adani Power would not have been a problem for Bangladesh had it been prepared. However, this has not been the case.
“The problem is that, unless we take enough precautions against such a situation, even a 5 percent cut in power supply is going to affect the system if you haven’t planned for alternative supplies,” Hossain told ThePrint. “What has happened is that we have several coal-fired power plants, but because we don’t have enough dollars in the country, we are not being able to source the coal imports.”
According to data with Bangladesh Bank, the country’s central bank, Bangladesh’s foreign exchange reserves have plummeted to $24.9 billion as of September 2024 from $35.8 billion two years earlier.
“We haven’t kept our power plants prepared for taking up the shortfall from Adani,” Hossain added. “Now they are ordering the coal, which will come by the end of the month, but that’s still three weeks away.”
According to a 4 November report in the Bangladeshi media, coal powered power plants in Bangladesh have been scaling back their power production, generating about half of what they have the capacity to produce.
Trouble extends to gas power plants as well
The Bangladeshi publication Daily Star reported in February that, amid a natural gas shortage in the country, several gas-based power plants were being brought back online to deal with an electricity shortage.
Hossain, however, believes that these plants will not be of any use to curb the shortfall created by Adani Power’s decision.
“It is immaterial whether the gas-based power plants come online or not,” he explained. “We have 12,000 MW of gas-based power plants of which we are able to only use half since we don’t have enough gas. The plants that are coming online will cause more trouble in terms of having to pay capacity charges and other running costs.”
What should come as some relief to the beleaguered power sector in Bangladesh is the fact that one of its only two liquified natural gas import hubs—the Summit LNG Terminal—finally came back online in September after having sustained cyclone damage in May this year.
“Summit is pleased to announce that Summit LNG Terminal Co Pvt Limited is now ready for ship-to-ship transfer and regasification of LNG in order to send out 500 million cubic feet per day (mmcfd) of regasified LNG to the national grid,” Summit, the owner of the terminal, said in a statement in September.
Here, too, however, the dollar shortage will pose problems, according to Hossain. While Bangladesh has a total regasification capacity of about 1,100 mmcfd—including the Summit LNG Terminal—the country is able to import only about 650 mmcfd of LNG.
“In winter, our demand goes down, so we should have been able to handle it, but because we were not prepared, it will cause some disruption,” Hossain said. “But in summer, from March-April onwards, we’ll need the full 100 percent Adani power supply. Otherwise, we will be in dire straits.”
The official cited above said that Adani Power’s decision to cut its supply to Bangladesh will likely have significant knock-on effects on the country’s industry and exports.
“Because we have a gas shortage, the industry is really suffering, which means our exports will also suffer,” he explained. “A lot of the gas goes to the power sector, so if the power sector can use more coal or get electricity from Adani, then the gas can go to the industry. It is very important for the Adani power to come to the country.”
Not in Adani’s interests to cut off Bangladesh completely
In August this year, the Indian government amended its power export rules to allow power exporters to also sell within the country in particular cases. This is of particular significance in this case because 100 percent of Adani Power’s Godda plant’s capacity was contractually bound for export to Bangladesh.
The August amendment allowed power exporters to connect to the Indian grid in case of payment defaults. At the time, this was seen as a move that would benefit the Adani Group since the Godda plant was the only one with 100 percent of its capacity bound to exports.
However, ThePrint has learnt that Adani Power has yet to connect its Godda plant to the Indian grid since it is taking time for the required power connections to be set up. This means that, should Adani Power completely cut off its supply to Bangladesh, the power generated by the Godda plant would have nowhere to be sold.
“This, of course, is not a position the company will want to be in and so it is working closely with the Bangladesh government to ensure the dues are paid and it can continue supplying the country,” a power sector analyst told ThePrint.
(Edited by Zinnia Ray Chaudhuri)
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