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Bangladesh has staved off more power cuts by India’s Adani Group after supplying the conglomerate with a new credit letter and reassurances that it will clear its mounting electricity bill.
Billionaire Gautam Adani’s group began reducing electricity supplies to Bangladesh from its 1,600 megawatt capacity coal plant in eastern India last week over a backlog of overdue payments estimated by the group to be about $850mn. The company had threatened a full cut by Thursday if Bangladesh did not give further information over its ability to clear the backlog.
The power dispute comes as Nobel laureate Muhammad Yunus, the country’s caretaker leader, is grappling with an economic crisis. The government in Dhaka is in talks with lenders, including the IMF and Asian Development Bank, for budgetary support to bolster its economy and replenish dwindling foreign exchange reserves.
Rezaul Karim, chair of the Bangladesh Power Development Board, confirmed that a new letter of credit to Adani Power had been signed off by the country’s government on Wednesday. “Now they can restart,” he told the Financial Times. “We are paying day to day, it’s a continuous process.”
A person familiar with the negotiations between Dhaka and Adani said the letter of credit was worth $173mn and was recognised as “valid” by the conglomerate after an initial dispute over the issuing bank.
Adani Group did not respond to a request for comment.
The electricity curbs and deadline imposed by the conglomerate prompted a heated response from Bangladesh’s new government, which took control following the ousting of autocratic leader Sheikh Hasina by student protesters in August.
Muhammad Fouzul Kabir Khan, chief energy adviser to Yunus’s government, told the FT earlier this week that “we would not allow any power producer to hold us hostage” but added that Bangladesh was “ramping up payments to all power producers as the economy improves”.
Adani has asked Bangladesh to settle its electricity dues at the end of the current financial year ending in March 2025, according to the person close to the talks between the company and Dhaka.
“The primary reason for all this is that Bangladesh simply does not have dollars,” they said. “It is affecting everything they do and their ability to do anything.”