Bangladesh Issues $173 Million Letter Of Credit To Adani Power After Electricity Supply Halved Over Rising Unpaid Bills: Report

The Bangladesh power board has reportedly issued a fresh letter of credit (LC) worth $173 million (around Rs 1,450 crore) to Adani Power to ensure uninterrupted electricity supply.

This comes after Adani Power reduced electricity supply by 50 per cent and its warning to halt supplies this week over unpaid bills amounting to $843 million (over Rs 7,000 crore).

“This is the third LC that the Bangladesh Power Development Board (BPDB) has provided Adani Power. Bangladesh’s Krishi Bank has given the LC and ICICI Bank is its counterpart in India. The earlier LCs were not in line with the power purchase agreement,” said an official aware of the development was quoted as saying by Economic Times.

Adani Power supplies Bangladesh with around 1,600 MW of electricity from its coal-based plant in Godda, Jharkhand, which comprises two units with a capacity of nearly 800 MW each.

“Adani Power has additionally demanded a payment of $15-20 million from BPDB failing which the company will not restart the first unit of 800 MW which it shut down last week,” said an official aware of the development, ET reported.

Supplying around 10 per cent of Bangladesh’s total electricity, Adani Power operates under a 25-year power purchase agreement (PPA) with BPDB, signed in 2015.

“Payment from BPDB is trickling in as Bangladesh has been granted a loan from the International Monetary Fund (IMF),” an industry official was quoted as saying in the ET report.

The official disclosed that payments owed to Adani Power from July to October is around $400 million, with Bangladesh so far paying less than half of that amount.

Monthly dues for Adani Power’s electricity supply are roughly $95-97 million.

Bangladesh has been facing a challenge in generating dollar revenues and using the same for payment of imported electricity and oil.

Bangladesh’s foreign currency reserves have dwindled amid a political turmoil that ousted the Sheikh Hasina government in August.

The interim government, which replaced Sheikh Hasina, has sought an additional $3 billion loan from the IMF in addition to an existing $4.7 billion bailout package.

In September, Adani Group chairman Gautam Adani wrote to Muhammad Yunus, the chief adviser to Bangladesh’s interim government, seeking his intervention in the early liquidation of nearly $850 million of receivables to the power producer.

Last month, Adani Power wrote to BPDB, urging that dues be cleared by 30 October and warning that non-payment would result in the suspension of electricity supply by 31 October under the PPA.

Apart from Adani Power, other companies like SEIL, NTPC Ltd, and PTC India Ltd also sell electricity to Bangladesh.

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