BD pays most part off, avoids $20m penalty

In a major financial manoeuvre, the interim government has paid nearly all outstanding dues to India's Adani Power, securing a waiver of US$20 million in late payment interest.

The Bangladesh Power Development Board (BPDB) confirmed a record monthly payment of $437 million in June to settle arrears with the Indian conglomerate.

This is the highest single-month payment made to Adani since Bangladesh began importing electricity from its Jharkhand-based Godda power plant in April 2023.

"We paid around US$437 million this month (June) to Adani to reduce the outstanding overdue payment," Bangladesh Power Development Board (BPDB) Chairman Md Rezaul Karim told The Financial Express on Sunday.

He expressed hope that the remaining overdue amount would be cleared soon. Adani has responded positively to the payment and has waived the late interest charges, he added.

With this payment, Bangladesh has so far remitted approximately US$1.5 billion to Adani Power Jharkhand Ltd (APJL), though a dispute remains over the exact amount still owed.

BPDB officials estimate the remaining dues at US$193 million, while Adani claims the figure is closer to US$340 million, highlighting ongoing disagreements over coal pricing formulas and capacity charges, according to sources familiar with the backlog.

Officials attribute the discrepancy between Adani's and BPDB's figures to differing coal pricing formulas and capacity charge calculations.

Despite the variance, Adani has agreed to waive US$20 million in interest, signalling a willingness to move forward as both sides continue negotiations.

Adani has so far received overdue payments until March, officials noted.

The company expects the Bangladesh government to clear the remaining dues by September and maintain regular payments going forward.

The payments come amid mounting pressure on Bangladesh's foreign exchange reserves and heightened scrutiny over the cost structure of imported electricity.

Adani Power, which operates the 1,496 MW Godda Ultra Supercritical Thermal Power Plant in Jharkhand, began supplying power to Bangladesh in April 2023.

Before the recent payments, unpaid bills had reportedly ballooned to nearly US$900 million, according to Adani's estimates.

The power purchase from the APJL plant has become a much-debated issue in Bangladesh since power flow began, under what many critics see as an overrated deal signed by the now-deposed Awami League government.

After power deliveries began, the BPDB requested revisions to the power purchase agreement (PPA) with Adani, particularly concerning electricity imports from the Jharkhand plant, but without success so far.

The original deal, signed in November 2017 for a 25-year term, includes a dedicated 400kV transmission line linking the Indian plant to Bangladesh's national grid.

The agreement has come under fire for contentious issues such as coal pricing, capacity payments, tax waivers, and other associated costs.

Adani shut down one of its two power units in Jharkhand on November 1 last year, halving cross-border electricity supply to Bangladesh due to a payment backlog of around US$850 million.

The company also threatened to halt the remaining unit from November 7 last unless dues were cleared.

However, Adani reversed its decision after BPDB paid US$170 million by opening a letter of credit (LC) through Bangladesh Krishi Bank.

Sources said the original agreement has drawn criticism for its coal pricing formula, which ties costs to volatile international benchmarks and includes high freight charges due to Adani's coal sourcing from distant suppliers like Australia.

A technical committee formed by Bangladesh's interim government has flagged these terms as disproportionately favourable to Adani, especially compared to other coal-based plants such as Payra.

Despite the disputes, both sides are now engaged in negotiations to reconcile differences.

Adani has expressed a willingness to revisit the pricing formula once all outstanding payments are settled, sources said.

The interim government, led by Nobel laureate Muhammad Yunus, has also launched a broader review of foreign power deals signed under the previous administration.

The Adani agreement, Bangladesh's single largest energy deal with an Indian investor, is under particular scrutiny for its long-term cost implications and lack of transparency.

Azizjst@yahoo.com