India’s Adani Power (Jharkhand), a 1,600MW power supplier, has warned it may halt electricity supply to Bangladesh over an unpaid bill dispute amounting to Tk 10,086 crore.
Additionally, local power plants – the 1,224MW S Alam-sponsored Banskhali plant and the 1,320MW Bangladesh-India joint venture plant at Rampal – have significantly reduced electricity production, contributing to over 1,000MW of load shedding due to similar payment issues.
“Bangladesh Power Development Board (BPDB) has not provided the required Letter of Credit (LC) for $170.03 million from Bangladesh Krishi Bank nor cleared the overdue amount of $846 million (Tk 10,086 crore) as of 27 October 2024,” stated Adani Power (Jharkhand) Limited’s representative and Joint Coordination Committee president, M.R. Krishna Rao, in a letter to the Power Division.
Rao emphasised 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.
He noted, “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.”
Adani’s letter urges 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).
Despite attempts to negotiate, Adani representatives report difficulties resolving the payment issue and side agreement disputes regarding additional coal tariffs for the Jharkhand plant. Currently, Adani is supplying 1,100MW of electricity during the 2 PM off-peak period.
Meanwhile, the 1,224MW Banskhali power plant, backed by S Alam Group, is seeking resolution of Tk 2,000 crore in outstanding payments.
“We request BPDB to settle outstanding payments promptly and ensure future payments are timely to maintain LC issuance for suppliers. This will enable the continued operation of the power plant until the next coal shipment arrives,” SS Power 1 Managing Director Tan Zheling stated in a letter to BPDB on 2 October 2024.
S Alam Group’s Chief Financial Officer (CFO), Ebadat Hossain Bhuyan, echoed this urgency, telling Just Energy News that BPDB needs to address the payments to sustain continuous operation. He noted that Unit 1 currently supplies 612 MW, with plans to commission Unit 2 on 6 November 2024, contingent on available funds.
Shutdowns in coal-fired plants, particularly Banskhali, have resulted in additional operating costs. Meanwhile, Bangladesh China Power Company’s 1,320 MW plant, which combines outputs from two units, has announced plans to shut down Unit 2 for a two-month overhaul starting 31 October 2024.
Managing Director and CEO of Bangladesh-China Power Company Ltd., A.M. Khorshedul Alam, noted that the company faces operational challenges due to outstanding payments totalling Tk 5,800 crore. Delaying Unit 2’s overhaul from 1 November 2024 could result in a USD $10 million loss, he said.
The Bangladesh-India joint venture Friendship Plant also suspended Unit 2 due to coal shortages, an official reported. Unit 1 remains operational, producing only 539 MW due to the shortage of coal and unpaid bills amounting to Tk 5,000 crore.
The 1200MW JICA funded coal fired plant at Matarbari also stopped production due to coal shortages, another official said.
“We are unable to maintain regular payments to base-load, low-cost power plants, which has led to over 1,000 MW in load shedding despite lower seasonal temperatures,” a BPDB official said.
The official warned that conditions will deteriorate further if BPDB fails to make timely payments as required by the PPAs.
Discussing the dispute, BPDB Chairman Rezaul Karim told Just Energy News, “Our unpaid electricity purchase dues totalled Tk 32,000 crore as of June, and this amount continues to rise.” He added that BPDB has expedited payment settlements since the interim government assumed control.
Currently, Bangladesh’s power generation capacity stands at over 27,000 MW, while peak demand is around 17,800 MW.
BPDB’s official data indicates a Tk 3,521 crore loss monthly due to the gap between electricity tariffs and costs. The data also shows that the country’s seven coal-fired power plants contribute 5,028 MW to the total 27,000 MW generation capacity, alongside 1,600 MW imported from India through dedicated power lines.
