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India's Adani conglomerate shut one of its two power units in Jharkhand that halved its cross-border electricity supply to Bangladesh in a hitch over payment backlog, sources said.
They said Adani Power Jharkhand Ltd (APJL) did it as the interim government didn't make its payment against power purchase by the deadline.
The company's one unit of the power plant, dedicated to electricity export to Bangladesh, which has the electricity-generation capacity of around 750 megawatts, was switched off at the zero-hour today (Thursday), a senior official of Bangladesh Power Development Board (BPDB) told the FE later in the day.
This is the first time APJL stopped supplying electricity to Bangladesh over payment row.
It also warned of shutting the remaining power unit, having the generation capacity of 750MWs, from November 7 if the BPDB does not clear the payments by next week, the BPDB official added.
Before the shutdown, the APJL authority was supplying around 1,016 MWs of electricity into Bangladesh's national grid on October 30, according to official data with the BPDB.
The supplier previously had forewarned the BPDB of "suspending electricity supply from October 31 if its overdue payments worth US$846 million were not cleared by October 30", he said.
The Indian power company also alleged that BPDB in the latest instance did not provide requisite letter of credit (LC) for $170.03 million for the power import.
"BPDB has not provided the required LC for $170.03 million from Bangladesh Krishi Bank nor cleared the overdue amount of $846 million as of 27 October 2024," APJL president Krishna Rao stated in a recent letter to the Power Division.
Mr Rao, also president of Joint Coordination Committee, argued that failure to submit the LC and settle the outstanding amount on time constitutes a 'material default' under the power- purchase agreement (PPA) with BPDB, hindering Adani Power's ability to maintain supply.
"Due to significant overdue payments and the lack of an LC, we face difficulties securing working capital for coal suppliers and Operations and Maintenance (O&M) contractors, with our lenders now withdrawing support," he stated.
The APJL letter urged BPDB to address these defaults by 30 October 2024, warning that failure to do so will force Adani to suspend supply on 31 October 2024, with capital-recovery measures enacted under PPA section 13.2(1), said the sources.
Officials say within one week of taking office by the interim government, electricity generation from the APJL plant dropped to almost half during mid-August.
The company had termed the power cuts as an outcome of a technical fault.
"We regret any inconvenience caused by this technical fault. We're working hard to fix the issue at the earliest and restore the full capacity of power generation," an APJL statement clarified then.
But no official statement from APJL was available over the closure of its unit-1 from October 31 despite repeated attempts.
Sources say APJL is the only foreign firm that produces electricity for Bangladesh from its plant outside the receiving country.
Adani has long been pressing BPDB to clear its dues in time.
Dollar crunch was pushing the power board to pay only a nominal amount to Adani every month, which was far below monthly bills against power purchases, resulting in huge unpaid bills to Adani.
The BPDB is currently struggling to pay dues to many independent power producers, oil-fired rental and coal-fired plants.
Market insiders say power purchase from the APJL plant turned out to be a 'much-debated' venture since the initiation of power supply from the facility last year.
As APJL started supply, BPDB sought a revision of the PPA with the former to import electricity from its Jharkhand plant, to no avail so far.
The deal was done in November 2017 for 25 years to transmit power through a 400kV (kilovolt) dedicated transmission line connected with the national power grid.
Transparency International Bangladesh, an anti-graft watchdog, also called for reconsideration and, if necessary, cancellation of the PPA with APJL.