Bangladesh has requested Adani Power to resume full power supply from the Godda Power Plant in Jharkhand, India. This comes after months of tensions, pricing disputes, and reduced electricity imports from Bangladesh due to financial constraints. The development marks a significant shift in Bangladesh’s energy policies and its relationship with India’s energy sector.
Background: The Adani Power-Bangladesh Agreement
The 1600 MW Godda Power Plant in Jharkhand was established to supply electricity to Bangladesh under a 25-year agreement signed in 2017 between Indian Prime Minister Narendra Modi and Bangladesh’s then Prime Minister Sheikh Hasina. The project, worth $2 billion, was meant to address Bangladesh’s growing energy demands.
However, the new Bangladeshi government under Mohammad Yunus (as per the transcript) raised concerns about high electricity prices, leading to a reduction in power imports. In October 2023, Bangladesh halved its electricity imports from Adani Power, citing high costs and declining demand during the winter season. The decision resulted in the plant operating at only 42% capacity.
Why Bangladesh Cut Electricity Imports
- High Power Costs: The Bangladeshi government argued that electricity from Adani’s plant was 55% more expensive than other sources. This was primarily due to the reliance on imported coal from Australia, which increased production costs.
- Economic Challenges: Bangladesh was facing a financial crisis, including a severe shortage of foreign exchange reserves. As a result, the government reduced power imports to save costs.
- Payment Delays: There were disputes over outstanding payments, with Adani Group claiming $100 million was due, while Bangladesh’s Power Development Board acknowledged only $50 million in dues.
Why Bangladesh is Now Requesting Full Supply
Recent developments indicate that Bangladesh is reversing its decision due to rising electricity demand and economic adjustments. The Bangladesh Power Development Board has started paying $85 million per month to Adani Power, signaling an effort to clear outstanding dues and ensure a stable power supply.
Several factors contributed to this shift:
- Growing Electricity Demand: Bangladesh’s energy needs have increased, making it necessary to secure additional power sources.
- Stabilization of Foreign Exchange Reserves: The government may have found financial room to resume full power imports.
- Resolution of Pricing Disputes: Both parties appear to be negotiating new terms for smooth operations.
Implications of This Development
- For Bangladesh: Ensuring stable electricity supply will support industrial growth, economic stability, and prevent future energy crises.
- For Adani Power: The resumption of full electricity supply will improve revenue and stock performance. The company’s shares have already reacted positively to the news.
- For India-Bangladesh Relations: The resolution of this dispute could strengthen bilateral ties, fostering deeper economic and energy cooperation.
Additional Context: Adani’s Legal Issues in the US
Apart from the Bangladesh power issue, Adani Group is facing allegations in the US under the Foreign Corrupt Practices Act (FCPA). The US Securities and Exchange Commission (SEC) and the Department of Justice accused Gautam Adani and his associates of bribing Indian officials to secure solar energy contracts.
However, former US President Donald Trump has signed an executive order to suspend the FCPA, arguing that it was harming American business interests. This move could provide relief to Adani Group by reducing legal risks in the US.
Conclusion
Bangladesh’s request to resume full power imports from Adani Power highlights the country’s growing electricity needs and its economic recalibration. While past disputes over pricing and payments strained the agreement, recent developments suggest a more cooperative approach. Meanwhile, Adani Power’s global challenges, including the US corruption case, remain an area to watch in the coming months.
Stay updated for further developments on this evolving issue.
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