Bangladesh has recently made a formal appeal to Adani Power to resume full supply from its 1,600‐megawatt power plant in India. This request comes after several months during which the power supply was significantly reduced, primarily owing to low winter demand coupled with persistent payment disputes. The matter, which involves a long‐standing contractual agreement and technical challenges, has now taken on renewed urgency as both sides appear to be working toward a resolution that will benefit the energy needs of Bangladesh while addressing Adani Power’s financial concerns.
The roots of this situation can be traced back to a 25‐year contract signed in 2017 under the leadership of former Prime Minister Sheikh Hasina. Under this agreement, Adani Power committed to supplying electricity exclusively to Bangladesh from its substantial power plant located in Jharkhand, India. This plant, valued at approximately US$2 billion, comprises two separate units, each with a capacity of 800 megawatts, thereby offering a total capacity of 1,600 megawatts. The terms of the contract were established with the aim of providing a steady and reliable supply of power to Bangladesh—a need that has grown even more critical over time as the nation strives to meet increasing energy demands.
However, the operational dynamics of this supply arrangement began to shift on October 31, when Adani Power was compelled to reduce its output to Bangladesh. This decision was influenced by payment delays that arose as Bangladesh encountered a foreign exchange shortage—a challenge that has reverberated through various sectors of its economy. The immediate consequence was the halving of the plant’s supply, a measure that significantly affected the reliability of power available to Bangladesh. Merely a day later, on November 1, one of the two units was forced into shutdown, reducing the plant’s operating capacity to approximately 42 percent. This marked a critical juncture in the relationship between the supplier and the purchaser, setting the stage for further disputes and technical complications.
Amid these developments, the state-run Bangladesh Power Development Board (BPDB) has taken an active role in managing the financial aspects of the contract. The BPDB has been remitting payments to Adani Power to clear outstanding dues, with current disbursements amounting to US$85 million per month. Despite these efforts, the financial relationship has remained strained due to accumulated overdue amounts, prompting BPDB to explore avenues for increasing monthly payments to reduce the arrears. In response to the ongoing issues, BPDB has directed Adani Power to resume the full supply from the second unit of the plant. However, technical difficulties have hindered this process; specifically, an issue involving high vibration levels prevented the planned synchronization of the second unit, thereby delaying the restoration of full capacity.
The technical setback, as explained by BPDB Chairperson Md. Rezaul Karim, reflects the complex interplay between operational performance and financial arrangements in large-scale energy projects. According to Karim, while there is a clear intention to bring the second unit online, technical factors such as elevated vibration levels have interfered with the synchronization process. This problem has added an additional layer of complexity to an already delicate situation, underscoring the importance of addressing both financial and technical concerns in parallel. The fact that BPDB continues to pay a substantial monthly amount while contending with these challenges highlights the critical nature of the energy supply for Bangladesh and illustrates the lengths to which the government is prepared to go to secure a stable power flow.
Beyond the immediate operational issues, a significant point of contention in this dispute revolves around the pricing structure of the power supplied under the contract. The agreement stipulates that power tariffs are calculated based on an average of two separate indexes. However, this method has come under scrutiny because the cost of power under the contract is reported to be approximately 55 percent higher than the average rate for Indian power sold to Dhaka. This discrepancy in pricing has fueled further debate over the fairness and long-term sustainability of the contract. As both parties acknowledge, the tariff calculation method plays a pivotal role in the ongoing financial disputes, and many observers now speculate that the contract may soon be subject to renegotiation in light of the current economic realities.
In a move that underscores the seriousness of the situation, a Bangladesh court has ordered that the contract with Adani Power be examined by a committee of experts. The review, expected to yield its findings within the current month, is aimed at determining whether the terms of the contract remain fair and viable under the prevailing economic conditions. The expert committee’s evaluation could pave the way for a comprehensive renegotiation of the agreement, potentially addressing concerns related to pricing, payment terms, and operational reliability. This judicial intervention is seen as a crucial step toward resolving the lingering disputes, as it brings an independent and expert perspective to a matter that has significant implications for national energy security and bilateral relations.
Complicating the matter further are allegations that Adani Power may have breached certain contractual obligations related to tax benefits. Documents reviewed by Bangladesh officials suggest that the Jharkhand plant received tax concessions from the Indian government that were not fully extended to Bangladesh under the terms of the agreement. These allegations have only deepened the divide between the two parties and have led to calls for a comprehensive review of the contract’s financial provisions. Adani Power, however, has consistently maintained that it has upheld all its contractual obligations and that there is no basis for the claims being made. A spokesperson for the company reiterated that all aspects of the contract have been honored and that there is no indication that Bangladesh is seeking to revise the contract on these grounds.
Adding another layer to an already complex narrative, the broader context of legal and regulatory scrutiny surrounding the Adani Group cannot be overlooked. In November, U.S. prosecutors indicted Gautam Adani, the founder of the Adani Group, along with seven other executives, in connection with a US$265 million bribery scheme in India. Although the Adani Group has categorically dismissed these allegations as baseless, the legal challenges have undoubtedly contributed to an atmosphere of uncertainty regarding its international operations. While the U.S. indictment is a separate issue from the ongoing dispute with Bangladesh, it has nonetheless cast a shadow over the group’s business dealings and may influence the perceptions of international partners regarding its reliability and transparency.
For Bangladesh, the resumption of full power supply from Adani Power is critical not only for addressing immediate energy shortages but also for ensuring long-term economic stability. The BPDB’s concerted efforts to clear overdue payments and restore full operational capacity underscore the vital importance of energy security in the nation’s development agenda. The ongoing dispute, which intertwines technical setbacks with complex financial arrangements, highlights the challenges inherent in managing cross-border energy agreements in today’s volatile economic climate. Both sides are now engaged in a delicate balancing act—one that seeks to reconcile the operational realities of large-scale power generation with the stringent financial requirements of international trade.
As discussions continue, there is cautious optimism that a mutually acceptable solution can be reached. Scheduled virtual meetings between BPDB and Adani Power officials are expected to address the remaining technical, financial, and contractual issues. The resolution of these challenges would not only restore the full capacity of the 1,600‐megawatt plant but also set a positive precedent for future energy deals between India and Bangladesh. The outcome of these negotiations is likely to have far-reaching implications, influencing how similar contracts are structured and managed in the future, and serving as a benchmark for resolving disputes in the energy sector.
In light of these challenges, it is clear that both Bangladesh and Adani Power are navigating a complex situation that involves not only immediate operational concerns but also long-term strategic considerations. The resolution of these issues will have profound implications for the energy sector in the region, influencing future contract negotiations, payment structures, and technical protocols. Observers note that this case may serve as a benchmark for how cross-border energy agreements are managed in an era of economic uncertainty and shifting market dynamics. As both parties work diligently to reconcile their differences, the outcome of their negotiations will likely set a precedent for similar agreements in the future. Ultimately, the success of this endeavor depends on a balanced approach that respects the technical integrity of power generation while ensuring that financial commitments are met in a timely and equitable manner. The careful and measured steps being taken by BPDB and Adani Power underscore a shared commitment to sustaining energy security and fostering cooperation, even in the face of significant challenges.
