The Adani Group has issued a warning to Bangladesh’s new interim government regarding overdue payments worth $500 million on the Godda power project calling the delay “unsustainable”, Financial Times reported.
The deal signed under the leadership of Bangladesh’s then Prime Minister Sheikh Hasina includes supply of coal-based power from Adani’s 1,600 megawatt (MW) Godda power plant in India. “We are in constant dialogue with the Bangladesh government and have apprised them of this unsustainable situation where we are meeting not just our supply commitment but also [commitments] to our lenders and suppliers in spite of rising receivables,” Adani Power was quoted as saying by FT.
Muhammad Fouzul Kabir Khan, chief energy adviser to Muhammad Yunus, who heads the interim government in the country, is reported to have said Bangladesh is overdue on $492 million of its $800 million debt to Adani. The total power-related debts of the country has reached $3.7 billion. The country is now seeking financial assistance from international lenders, including the World Bank, to revive its economy.
The Godda deal was agreed back in 2015 during Prime Minister Narendra Modi’s visit to Dhaka. The project had become fully operational last year and had begun supplying power to Bangladesh in April. It is the only power plant in the country to export its entire output to Bangladesh.
Activists have repeatedly criticised the project claiming that the high cost of importing power from Godda is not economically viable for Bangladesh. Adani Group, on the contrary, has claimed that its cost of power is very competitive when compared to the other imported coal-based power plants.
Falling domestic gas reserves have made Bangladesh prone to energy shortages.
Khan told FT that Yunus’s administration would reintroduce competitive bidding, empower regulators and establish an expert committee to re-examine energy deals negotiated under the previous government. “This is for all the transactions. We don’t want it to be discriminatory,” Khan said. As per the report, Yunus’s government does not want to upset relations with India or China and emphasizes on the need for future infrastructure deals to be cost-effective and transparent.
The Indian government had recently amended its guidelines allowing electricity exports to sell power domestically. The move could enable Adani Group to find alternative domestic buyers for power generated from its Godda power plant. However, the Group has said that it plans to continue power supplies from Godda plant to Bangladesh only, as it is not connected to the Indian grid.