Adani group warns Bangladesh government over unpaid Power Project dues
- In Reports
- 04:23 PM, Sep 09, 2024
- Myind Staff
The Adani Group has issued a warning to Bangladesh’s interim government, led by Nobel Peace Prize laureate Muhammad Yunus, regarding unpaid dues linked to a controversial power project, according to a report by The Financial Times (FT). Bangladesh has accumulated $500 million in overdue payments, threatening to strain the early days of Yunus's administration, which took power after student protests ousted former Prime Minister Sheikh Hasina.
Yunus’s government attributes the country's financial struggles to "opaque, expensive infrastructure deals," including a significant agreement with Adani Power. The deal, signed during Hasina’s tenure, involves the supply of coal-generated electricity from Adani’s 1,600-megawatt Godda plant in India.
Adani Power expressed concerns over the unsustainable nature of the mounting dues. The company told FT, “We are in continuous discussions with the Bangladesh government and have made them aware of the unsustainable situation we face in meeting both our supply commitments and obligations to lenders and suppliers, despite the rising receivables.”
Despite these financial challenges, Adani Power reaffirmed its commitment to supplying reliable and competitively priced electricity to Bangladesh from the Godda facility. Currently, Bangladesh’s total power liabilities have reached $3.7 billion, with $492 million owed to Adani Power alone. The report adds that the country's debt to the conglomerate could rise to as much as $800 million.
Yunus’s administration is working to secure international loans, including from the World Bank, to stabilise the nation’s finances. Adani Group has significant investments across multiple sectors in Bangladesh, including ports, data centres, and energy. The deal for the Godda power plant was signed in 2015 during Indian Prime Minister Narendra Modi’s visit to Dhaka. The project, which became fully operational last year, has faced criticism from activists over its high costs, with claims that importing power from the plant is not financially viable for Bangladesh. However, Adani maintains that its pricing for electricity is "very competitive" compared to other coal-based power plants.
In response to the growing debt, Yunus’s government plans to reintroduce competitive bidding for future infrastructure projects and reassess agreements made under the previous administration. This review will encompass not only deals with Indian companies but also those with China, as Bangladesh seeks to negotiate more cost-effective terms.
Bangladesh, the world’s second-largest garments exporter, has long struggled with energy shortages, exacerbated by dwindling domestic gas reserves. Amid the ongoing political unrest, many international clothing brands have shifted production to India, as previously reported by Business Standard.
Recently, India amended its guidelines to allow electricity exporters to sell power domestically, potentially offering Adani the opportunity to find alternative buyers for its Godda power plant. However, Adani has stated that it has no plans to divert supplies from Bangladesh, reaffirming its commitment to meeting the country’s energy needs.
Image source: Business Today
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