India cuts power supply to Bangladesh
India’s Adani Power Jharkhand Limited has halved its power supply to Bangladesh, saying it has yet to receive outstanding bills. Bangladesh reported a shortfall of more than 1,600MW on Thursday night after the 1,496 megawatt Adani plant reduced supply.
Power Grid Bangladesh PLC data show the plant is producing around 700MW from a single unit now.
Earlier, Adani Power Jharkhand Limited (APJL) had written to the power secretary, asking the Bangladesh Power Development Board (PDB) to pay the bills by October 30.
“Otherwise APJL shall be constrained to take remedial action under the Power Purchase Agreement (PPA) by suspending power supply on October 31,” Adani wrote in the letter seen by The Daily Star.
The letter, dated October 27, said: “As you [secretary] are aware, the deadline is approaching shortly and till date, PDB has neither provided LC for an amount of $170.03 million from Bangladesh Krishi Bank nor cleared the outstanding amount of $846 million.”
A PDB official told The Daily Star that they had cleared a portion of previous dues earlier, but since July, Adani has been charging more than the previous months.
He said the PDB has been paying around $18 million weekly, while the charge is more than $22m. “This is why the due payments increased again.”
The official added that they had submitted last week’s payment to Krishi Bank as well, but the bank failed to open a letter of credit against the payment due to a dollar shortage.
About the additional payment, he said, when the PDB raised a question on the coal pricing in February last year, they signed a supplementary deal. The deal obliged Adani to quote coal prices less than the rates charged by the other coal-fired power plants, such as Payra and Rampal.
After the tenure of the one-year supplementary deal, Adani again started charging as per the PPA. According to the PPA, coal prices are calculated based on the average price of the Indonesian coal index and the Australian Newcastle index, which increases the prices.
The Adani letter said the company once again requested PDB to expedite payments of “material defaults” no later than October 30.
It said Adani revised the deadline for the suspension of power supply to October 30 from October 20 in response to a PDB letter on October 17, which confirmed that the Krishi Bank agreed to issue LC within 10 business days.
“We reiterate that non-submission of LCs and non-payment of outstanding amount within due date are the material defaults of PDB under the PPA, which has adversely affected the performance of APJL to supply power to PDB,” it said.
“We have been facing tremendous difficulties in managing working capital for making payment to coal suppliers and operations and maintenance contractors on account of huge outstanding payments from the PDB and the non-availability of LC, as well as our Lenders having withdrawn the working capital support,” the letter added.
Adani said that during the period of suspension of supply, the company reserves its right to recover capacity payments under Section 13.2(1) of the PPA.
Adani has been pressing the interim government to pay the dues since they took charge. Gautam Adani, chairman of Adani Group, also wrote to Chief Adviser Muhammad Yunus.
Published in Dawn, November 4th, 2024