Adani warns Bangladesh about $500m overdue: FT 

India’s Adani Group has warned Bangladesh’s interim government that its backlog of overdue payments has become ‘unsustainable’, according to a report published in the Financial Times (FT) on Monday.

As Bangladesh falls $500 million behind on dues from a ‘contentious power project,’ Adani group issued the warning, the report added.

“The overdue power liabilities are threatening an early crisis for the interim government of Nobel Peace Prize laureate Muhammad Yunus, who took over last month after student protesters ousted authoritarian prime minister Sheikh Hasina, a close partner of India,” said the FT report written by Benjamin Parkin in New Delhi.

“Yunus’s government blames opaque, expensive infrastructure deals negotiated under Sheikh Hasina for tipping the country of 170mn into a financial hole,” the report added.

“Among the most contentious was the deal with Adani, owned by Asia’s second-richest man Gautam Adani, to supply coal power from its 1,600-megawatt Godda plant in India,” it added.

Adani Power told the FT: “We are in constant dialogue with the Bangladesh government and have appraised them of this unsustainable situation where we are meeting not just our supply commitment but also [commitments] to our lenders and suppliers in spite of rising receivables.”

The conglomerate also quoted to has said that it would “continue to supply reliable and competitively priced power from our Godda facility to Bangladesh, despite mounting dues”.

The FT also talked to Muhammad Fouzul Kabir Khan, the energy adviser of the interim government. He acknowledged that Bangladesh is late on paying $492mn to Adani, to whom it owes as much as $800mn in total. The country also faced a total power liabilities of $3.7bn as of the middle of last week, the adviser added.

Khan further added that the interim government had approached lenders including the World Bank for billions of dollars in loans to help stabilise its finances. “Since joining [the government], we’ve been firefighting,” Khan quoted to have said.

The FT report also mentioned that Bangladesh is the world’s second-largest garments exporter and has grown rapidly in recent years but has suffered chronic energy shortages due to falling domestic gas reserves.

“Critics said measures passed by Sheikh Hasina — ostensibly aimed at speeding up projects, such as by bypassing open tendering — facilitated rampant corruption,” it added.

Adani is one of India’s most active conglomerates, with investments in everything from ports to data centres, according to the FT report. “Indian authorities announced last week the group would build a $10bn semiconductor plant with Israel’s Tower Semiconductor,” it further added.

Short seller Hindenburg Research last year accused the group of “fraud” and stock market manipulation. Adani has denied the allegations.

The FT report provided the background of the Adani deal with Bangladesh.

“Adani’s Godda deal was agreed during a 2015 visit by Indian Prime Minister Narendra Modi to Dhaka,” it added. “Activists have repeatedly criticised the project, which became fully operational last year, saying the high cost of importing power from Godda did not make sense for Bangladesh.”

Adani, however, claimed that its cost of power is ‘very competitive’ when compared to the ‘other imported coal-based power plants’.

Khan also told FT that Yunus’s administration would reintroduce competitive bidding, empower regulators and establish an expert committee to re-examine energy deals negotiated under the previous government.

“This is for all the transactions. We don’t want it to be discriminatory,” Khan added.

Meanwhile, Yunus’s government has said it does not want to upset relations with India or China. In this connection, the energy adviser added that he told the China’s ambassador in Dhaka this month that infrastructure deals negotiated with Beijing had to be more “cost effective”.

The Export-Import Bank of China, for example, helped finance the Banshkhali power plant built by Bangladesh’s S Alam Group, whose chair is now being investigated for money laundering, added the FT report mentioning that the company did not respond to a request for comment.

“We didn’t want to give the message . . . that there’s a bull in the China shop,” Khan told FT. “Bangladesh is open . . . Whoever will give us value for money, the lowest price and good quality, we’ll [choose] them.”

The FT report also pointed out that following Sheikh Hasina’s ousting, India altered its guidelines to allow electricity exporters to sell domestically, a move that could allow Adani to find replacement buyers for its Godda power.

Adani, however, said it did not have plans to divert supplies away from Bangladesh.

“Currently our Godda plant is not connected to the Indian grid and hence there is no question of looking for any alternate supply market,” the company said. “We remain steadfast in our commitment... and look forward to the Bangladesh government for similar reciprocity.”