The Adani Group has reassured Bangladesh of a continuous power supply, even though the country currently owes over $800 million for power delivered from Adani Power’s Godda plant in Jharkhand. Sources familiar with the matter disclosed this information to Moneycontrol.
“The Adani Group has requested Bangladesh’s interim government to expedite the payment of these dues,” one source stated.
The group expressed concerns about mounting pressure from lenders for loan repayments, which were incurred during the plant construction.
They hope the payments, including interest accrued from the delay, will be settled soon.
At the time of publishing this article, no official response had been received from the Adani Group spokesperson.
The Godda Power Plant: A Key Energy Source for Bangladesh
Adani Power’s 1,600 MW power plant, located in Godda, Jharkhand, has a 100% supply agreement with Bangladesh’s Power Development Board (BPDB), the country’s key power distribution body. The plant’s monthly billing typically ranges between $90 million and $100 million.
The agreement to supply power was made in November 2017, under a 25-year power purchase agreement (PPA) signed with the BPDB.
This deal was reached during the administration of Bangladesh’s former Prime Minister Sheikh Hasina.
Adani Power supplies 1,496 MW to Bangladesh, accounting for roughly 10% of the country’s peak power demand.
The Godda project, with a total cost of $2 billion, stands out as India’s first transnational power project. All electricity generated is supplied to Bangladesh.
The plant started producing electricity in June 2023, and since then, it has been consistently powering Bangladesh.
Adani Power’s Financial Performance
As of June 30, 2024, Adani Power reduced its net debt to ₹25,653 crore, compared to ₹26,545 crore on March 31.
The company also reported a reduction in its finance costs for the first quarter of the 2024-25 fiscal year, dropping from ₹883 crore last year to ₹811 crore.
However, Adani Power experienced a significant drop in its net profit, which declined by 55.33%, falling to ₹3,912.79 crore in Q1 2024-25, compared to ₹8,759.42 crore in the same period of the previous year.
On the revenue side, the company saw a healthy increase. Revenues surged by 35.89%, rising to ₹14,955.63 crore in Q1 2024-25, compared to ₹11,005.54 crore during the same quarter last year.
In addition to power supply, the Adani Group also operates edible oil refineries and rice packaging facilities in Bangladesh, further strengthening its presence in the country.
Outstanding Dues and Economic Challenges in Bangladesh
During an investor call in May 2024, Adani Power’s regulatory head, Shailesh Sawa, explained that the Bangladesh Power Development Board (BPDB) had an outstanding debt of around $400 million at that time, equivalent to about four months of unpaid bills.
Sawa mentioned that Adani Power’s monthly billings for Bangladesh are approximately $90 million, with payments made in US dollars.
Bangladesh is facing economic challenges, including shrinking foreign exchange reserves. According to Bloomberg, Bangladesh’s gross reserves stood at $20.5 billion as of July 31, 2024, enough to cover just three months of imports.
To address these economic hardships, the interim government is seeking additional loans from the International Monetary Fund (IMF), alongside the existing $4.7 billion loan program.
New Rules for Power Exporters
In response to the growing concerns over payment delays and reduced demand for exported power, the Indian government introduced new regulations on August 5, 2024.
These rules allow Indian power producers who export electricity, like Adani Power, to sell their power in the domestic market if they face consistent payment defaults or reduced offtake from international clients.
Stock Performance
As of 12:47 p.m. on August 23, 2024, Adani Power’s stock was trading at ₹641.10 on the National Stock Exchange, reflecting a slight decline of 0.43% from the previous day.
Summary
In summary, while Adani Power remains committed to supplying electricity to Bangladesh, it faces increasing financial pressure due to delayed payments.
Both parties are hopeful that the dues will be cleared soon, allowing the power supply arrangement to continue smoothly.
Meanwhile, Bangladesh’s interim government is working to stabilize its economy and secure additional funds to address its challenges.