In brief
Bangladesh faces intensified power shortages and pressure on its financial resources, prompting authorities to expedite payments to Adani Power after the conglomerate halved electricity delivery over an $800 million unpaid bill.
Bangladesh is taking urgent action amid escalating power shortages, increasing its repayments to Adani Power after the Indian conglomerate significantly reduced its electricity supply due to an outstanding $800 million bill. According to two senior officials, Bangladesh has begun processing partial payments to the company, which is responsible for supplying roughly 10% of the nation's electricity. A senior official from the Bangladesh Power Development Board disclosed that the government has issued a $170 million letter of credit, addressing prior payment issues. Adani Power, which provides energy through a 1600-megawatt coal-fired facility in eastern India, has yet to respond to inquiries regarding the cuts.Adani has allegedly threatened to suspend all electricity supplies if the owed payments are not settled by November 7. However, officials from the Power Development Board remain optimistic about avoiding a complete supply cut, stating that they will continue to make steady payments to resolve the crisis.Fouzul Kabir Khan, energy advisor to the interim government, expressed his surprise over the supply reduction amidst increased repayment efforts. Bangladesh has escalated its repayment amounts, growing from $35 million in July to $97 million by October.Amidst this turmoil, Bangladesh is currently grappling with heightened power deficits particularly in rural areas and struggles to generate necessary dollar revenues for imports. Ongoing political instability exacerbated the economic situation, leading the interim government to seek an additional $3 billion loan from the International Monetary Fund in addition to its existing loan package.Concerns have also been raised regarding previous energy deals, including the one with Adani, with claims of lack of transparency under the previous administration. A national committee is now reviewing these agreements, assessing the implications of these costly contracts.While engaging with Adani, Bangladesh continues payments to other Indian power providers like NTPC Ltd and PTC India Ltd. To alleviate the energy shortfall, the government is restarting gas and oil-fired power plants, although this comes with higher costs. With the winter season approaching, it is anticipated that power demand will lessen.Experts highlight the marginally higher cost of Adani’s power compared to local producers, yet emphasize its crucial role in the current supply landscape. Furthermore, plans for a first nuclear power plant, aided by Russian support, are underway to diversify the energy portfolio, with an estimated cost of $12.65 billion.In a bid to manage the ongoing power crisis, Bangladesh has introduced measures to decrease school and work hours, ensuring that energy resources are adequately directed to essential needs.
