Despite the rocky history, there is cautious optimism. Sources familiar with the matter say Adani has shown interest in revisiting the PPA’s pricing formula once all arrears are cleared, potentially paving the way for a more balanced arrangement moving forward.
In a major step to stabilize cross-border energy relations and relieve financial pressure, Bangladesh’s interim government has paid the bulk of its outstanding dues to India’s Adani Power, narrowly avoiding a $20 million penalty in late payment charges.
The Bangladesh Power Development Board (BPDB) confirmed it transferred a record $437 million in June to settle mounting arrears with Adani Power Jharkhand Ltd (APJL), the Indian firm operating the 1,496-megawatt Godda Ultra Supercritical Thermal Power Plant in Jharkhand. This marks the single-largest monthly payment made to Adani since Bangladesh began importing power from the plant in April 2023.
“We paid around US$437 million this month to Adani to reduce the outstanding overdue payment,” BPDB Chairman Md Rezaul Karim told The Financial Express on Sunday. He added that Adani responded positively by waiving the $20 million in interest charges, signalling a renewed commitment to the power partnership.
Deferring Further Penalties
With this latest payment, Bangladesh has now remitted around $1.5 billion to APJL. However, the total amount of dues still under dispute remains unresolved. While BPDB officials estimate the outstanding balance at $193 million, Adani puts the figure closer to $340 million – a difference largely attributed to disagreements over coal pricing formulas and capacity charge calculations.
Sources close to the negotiations said that although the figures vary, Adani has agreed to defer further penalties and is optimistic the remaining payments will be made by September. In the meantime, the company has received overdue payments up to March 2025.
The move to clear the dues comes amid growing concerns over Bangladesh’s dwindling foreign exchange reserves and increasing scrutiny over costly energy import contracts signed by the previous Awami League government. Critics argue that the Adani power deal – the country’s largest energy agreement with an Indian investor – was structured unfavourably, particularly in terms of coal pricing, tax concessions, and long-term financial liabilities.
Coal from Australia
The 25-year power purchase agreement (PPA), inked in November 2017, includes a dedicated 400kV transmission line linking the Indian power plant directly to Bangladesh’s grid. Despite its strategic value, the deal has sparked debate for relying on imported coal from far-off suppliers like Australia, leading to high freight and fuel costs. A technical committee formed by the interim government has flagged the PPA as overly generous to Adani when compared to similar arrangements, such as the Payra coal plant.
Payment delays had previously disrupted power supply from the Jharkhand plant. On November 1, 2024, Adani shut down one of its two units due to overdue payments totalling to approximately $850 million. The company even threatened to cease all power exports unless dues were cleared. This prompted Bangladesh to make an emergency payment of $170 million through a letter of credit issued by the state-run Krishi Bank, temporarily averting a full shutdown.
The Muhammad Yunus led interim government has since launched a wider review of all foreign power agreements made under the previous regime. The Adani deal is receiving particular attention for its long-term cost implications and the opacity of its terms.
Despite the rocky history, there is cautious optimism. Sources familiar with the matter say Adani has shown interest in revisiting the PPA’s pricing formula once all arrears are cleared, potentially paving the way for a more balanced arrangement moving forward.
As Bangladesh works to regain financial stability and energy reliability, resolving the Adani dispute may serve as a test case for renegotiating other controversial contracts – and reasserting greater fiscal discipline in future foreign investments.
