As reported by Reuters, on Monday, Adani Power decided to initiate an international arbitration to settle a payment dispute with Bangladesh over power supply. The company headed by Gautam Adani has been at loggerheads with the Bangladesh Power Development over the long-pending payments for the power supply as part of an agreement signed in 2017

"There are disagreements in the way certain cost elements are calculated and billed. Hence, both partners have agreed to invoke the dispute resolution process and are confident of a quick, smooth and mutually beneficial resolution," an Adani Group spokesperson told Reuters.

Adani Power operates a 1,600 MW coal-fired plant in Godda, eastern India, which supplies nearly 10% of Bangladesh’s electricity needs.

Bangladesh’s interim power minister, Muhammad Fouzal Kabir Khan, had earlier accused Adani of breaching the power purchase agreement by withholding tax benefits granted to the Godda plant by India. However, he told Reuters that negotiations are still on. "Once that process is over, we will move toward international arbitration, if needed," he said.

The two sides have been locked in a dispute over how certain cost components under the power purchase agreement are calculated and billed.

Last week, Adani said its outstanding dues from Bangladesh had dropped sharply — to the equivalent of 15 days’ tariff — from around $900 million in May and nearly $2 billion earlier this year.

"Adani Power reaffirms its commitment to the PPA and will continue to support Bangladesh by supplying reliable, cost-competitive and high-quality power," the company said.

In the meantime, speaking to The Business Standard today, Fouzul Kabir said, "Adani had written us a letter to clear outstanding bills. In the letter, they threatened to suspend power supply over unpaid dues from 11 November if payments are not made by November 10."

As per accounts of officials at Bangladesh Power Development Board (PDB) and the Power Division, a formal letter was sent in late October from Avinash Anurag, Head of Energy Regulatory & Commercial at Adani Power, to the PDB chairman informing about the stalling of power supply.

In the letter, Adani Power stated that PDB had failed to settle "long-held" $496 million in outstanding bills despite repeated reminders and communications.

Of this, PDB's own acknowledged dues of $262 million also remain unpaid, the letter further said.

Citing continuous non-payment, Adani invoked sections 13.2(i)(i) and (ii) of the 2017 Power Purchase Agreement (PPA), which allowed the Indian giant Adani Power to suspend power supply in case of default by the buyer (PDB), claimed Adani.  

The company also stated that, even if supply is halted, it remains entitled to capacity payments based on the plant's "dependable capacity."

This is not the first instance of strain in the Adani-PDB relationship.

Earlier in November 2024, Adani Power reduced electricity supply to Bangladesh by about 60%, citing overdue bills amounting to $800 million – a figure which PDB disputed.