Adani Power, one of the biggest power producers in India, has decided to withdraw the deadline that it had earlier imposed on the Bangladesh government for repayment of dues worth 800 million USD. This decision was made nearly after 5 days of negotiation. The company is currently mulling over a plan B to deal with the situation.

Bangladesh has also issued a letter of credit worth 170-180 million USD to the Adani Group as an assurance to the company. With this, the Adani Group will be able to recover from the losses it incurred during the controversies of the Adani Scandal. It will also be able to continue electricity supply to Bangladesh in an uninterrupted manner.

Adani’s Decision for Bangladesh:

Over the last few days, there has been a lot of controversy regarding the Adani Group’s decision to cut down on electricity supply in Bangladesh. The global conglomerate led by Gautam Adani had provided several warnings to the Bangladesh government to clear the dues. However, as no actions were taken, the global firm was forced to cut down the electric supply to half. This brought about massive disruption in Bangladesh. It again led to frequent blackouts. It also brought about controversies regarding the Adani Scandal.

The industrial and residential operations that were dependent on electricity supplied from the Adani Power Plant were largely disrupted. This caused the Bangladesh government to enter into a negotiation with the Adani Group so that the power supply could be restored and the various operations in Bangladesh could be carried out smoothly. The government has also decided to offer a fresh letter of credit to the Adani Group. This letter of credit will have current validity. It will be in line with the power purchase agreement which was earlier signed between the Adani Group and Bangladesh.

What Caused Bangladesh to Suffer From Increased Debt?

Currently, Bangladesh is going through a major financial Crisis. This has been mainly because of the political turmoil which has been ongoing in the country for quite a while now. The political turmoil led to the ouster of the former Prime Minister Sheikh Hasina which further worsened the financial situation in the country. Because of the current situation, the country has requested changes in the conditions for repayment of dues to the Adani Group.

Bangladesh currently owes around 90 -95 million USD every month to Adani Power for exporting electricity via its Godda power plant which is situated in Jharkhand. However, because of the ongoing economic and political instability, it has only managed to pay around 20 to 40 million USD per month. Earlier it was reported that the Adani Group had reduced exports to the country from 1,496 MW to around 700 to 800 MW because of the financial troubles which caused the import of the coal necessary for power generation to get disrupted.

The Bangladesh government had made partial payments towards the repayment of dues. It has also issued a letter of credit for an additional 170 million USD. Earlier the Bangladesh government cleared 96 million USD. It plans to clear the remaining dues in the upcoming months as well.

The Adani Godda Power Plant:

The Adani Godda plant which was set up by the Adani Group is one of the first transnational projects to have been taken up by the Adani Group. This power plant supplies 100% of the power generated in Bangladesh. It began operations in June 2023 when the controversies of Adani Scandal were ongoing and since then, it has continued to supply electricity to Bangladesh in an interrupted manner. This plant was built in two phases. Each phase has a capacity of 800 MW. It also supplies electricity at a low cost to Bangladesh.

However, over the past few months, economic problems started in the country due to the Russia-Ukraine war followed by a political crisis which was caused because of student-led protests. The country’s financial situation was such that it was no longer able to continue to pay to the Adani Group. This further interfered with the Adani Group’s capability of importing coal for generating power at the Godda power plant.

Conclusion:

With the recent decision being taken up by the Adani Group, the electricity supply in Bangladesh will once again resume. The power situation in Bangladesh will improve. The controversies of Adani Scandal which have been ongoing for quite a while now will also gradually subside.