MoF turns down request for $700m funds

The Ministry of Finance (MoF) has turned down a request for US$700 million to pay outstanding electricity bills owed to India's Adani Power Ltd in a single instalment, sources said.

Finance officials cited a lack of budgetary allocation for such payments as the reason for rejecting the Power Division's request, they added.

Officials noted that the interim government is keen to clear the dues before the end of the current fiscal year (FY2024-25), which concludes on June 30.

Power, Energy and Mineral Resources Adviser Muhammad Fouzul Kabir Khan recently spoke to Finance Secretary Dr Khairuzzaman Mozumder, seeking the fund allocation to facilitate prompt payment.

However, sources said the finance ministry has expressed its inability to make such a large payment at this time, as no allocation has been made for it in the current budget.

A senior Finance Division official told The Financial Express that while fixing the electricity price and signing the power purchase agreement (PPA) with Adani Power Ltd, the previous government did not consult the Ministry of Finance.

The then government also refrained from making any payments to Adani during the first five months of power supply from Adani's plant, citing the country's low foreign exchange reserves.

"Now the Power Division is requesting a fund, which is a substantial amount," the official said.

A senior official at the Power Division stated that the PPA with Adani Power Ltd was "flawed," containing a provision for 15 per cent compound interest on unpaid bills. Later, following repeated requests by the interim government, the Adani Group agreed to charge simple interest instead of compound interest.

According to the official, Adani claims that around $900 million remains unpaid in power bills, including interest, while the Bangladesh Power Development Board (BPDB) estimates the amount to be around $700 million.

"We have a dispute with the Adani Group over the coal index, which has caused the difference in the bill amounts," he said.

Sources said Adani Power Ltd's Chief Executive Officer, Shersingh B. Khyalia, visited Bangladesh last week and requested Power Division officials to clear the outstanding electricity bills.

According to a Power Division official, the Adani CEO also revisited a previous offer to waive $50 million if the $700 million dues are paid in one go.

However, Power Division officials said they could not give any assurance regarding immediate payment.

syful-islam@outlook.com