Dhaka, Bangladesh – Indian conglomerate Adani Group, owned by billionaire Gautam Adani, has begun reducing electricity supplies to Bangladesh and is threatening to cut off power exports completely unless overdue payments are addressed. This pressure on Bangladesh’s power sector comes at a critical moment, as the interim government grapples with economic uncertainty and increased energy costs.
On Thursday, Adani Group started reducing power flows from its 1,600-megawatt coal-fired Godda plant in eastern India by as much as 50%, as recorded by Bangladesh’s power grid. The company has issued a deadline of November 7 for full payment arrangements to be clarified or risks a total cutoff in power exports, according to sources familiar with the situation.
The issue has escalated as Bangladesh currently owes approximately $700 million, despite paying around $100 million in October and opening a letter of credit for an additional $170 million. Muhammad Fouzul Kabir Khan, the chief energy adviser to Bangladesh’s interim administration under Nobel Peace Prize laureate Muhammad Yunus, expressed surprise and disappointment at Adani’s decision, emphasizing that Bangladesh was already making efforts to address debt.
Economic and Political Challenges Amid Energy Crisis
dispute over payments has brought to light Bangladesh’s economic fragility, worsened by a recent political shift. Following the ousting of former Prime Minister Sheikh Hasina by a student-led movement in August, the government under Yunus has sought to stabilize the country amidst rising costs for imported fuel and essential commodities. Sheikh Hasina, who ruled for over 15 years, fled the country and is reportedly in hiding.
With energy shortages looming, the Yunus administration has turned to costly liquid fuels, including diesel and furnace oil, to sustain electricity production amid reduced supplies from Adani. “We’re managing,” Khan stated, though he noted increased costs involved in shifting to see expensive alternatives. “We’re now running additional coal-based plants, but we expect Adani to fulfill its contractual obligations. We’ll consider all legal options if necessary.”
Scrutiny on Hasina-Era Energy Deals
As part of a larger economic restructuring, the Yunus government has launched a review of contracts signed under Sheikh Hasina’s administration, many of which have been labeled opaque and financially burdensome. Deal with Adani, formed during Indian Prime Minister Narendra Modi’s 2015 visit to Dhaka, has faced criticism from activists who question the cost-effectiveness of importing power at high prices.
The government has appointed a committee to re-evaluate the contracts, with results expected within two weeks. “We are assessing all significant agreements, and the Adani deal is high on the list,” Khan stated. Adani Group has not issued an immediate response to the government’s concerns, though it has previously defended its pricing as competitive compared to imported coal-fired power sources.
Bangladesh’s Economic Struggles and IMF Assistance
Amid these challenges, Bangladesh is also working with the International Monetary Fund (IMF) for additional financial aid. The government has requested an additional $3 billion to stabilize the economy following a previous $4.5 billion bailout in 2022. IMF representatives who visited Dhaka in September observed a slowdown in economic activity, amplifying concerns over Bangladesh’s fiscal health.
Despite receiving regular payments, Adani Group officials have warned that overdue amounts are becoming unsustainable, indicating further pressure on Bangladesh’s ability to settle its obligations.
Regional Implications and Future Outlook
power dispute underscores vulnerabilities in Bangladesh’s energy reliance on imported resources and the strategic influence of India’s economic reach in the region. With a strained economy and new political leadership, Bangladesh’s energy future now hinges on renegotiating legacy deals and addressing its mounting energy costs.
As the November 7 deadline approaches, it remains uncertain whether Bangladesh can settle its dues or secure a new arrangement with Adani Group. For now, the interim government faces the dual challenge of stabilizing the nation’s power supply while addressing broader economic demands in a post-Hasina era.
