Amid mounting debts to Indian energy companies, Bangladesh faces increasing pressure to clear overdue payments to Adani Power and suppliers, fueling tensions as Dhaka grapples with its tight foreign reserve situation. In a recent move, Bangladesh Power Development Board (BPDB) issued a $173 million Letter of Credit (LC) to Adani Power, responding to the company’s deadline for overdue payments.
The Bangladeshi government has assured that payments are being managed in an organized manner. Muhammad Fouzul Kabir Khan, an adviser for the Ministry of Power, Energy, and Mineral Resources, stated, “Payments to all creditors are being made as per a payment plan.” However, due to financial constraints, Bangladesh may only be able to release around $160 million initially. This amount is a fraction of the growing debt Bangladesh owes Indian energy companies, which continue to supply power despite significant delays in receiving payments.
High Court Steps In, Reviews Key Contracts
In response to concerns over the fairness of power contra the s, Bangladesh High Court has established an independent committee to investigate 11 key agreements, including Adani’s power contract. This committee, which operates without government representation, was formed after suspicions arose about potential irregularities in terms offered to foreign suppliers. The court’s review could ultimately result in renegotiated contracts if the committee concludes that deals favored suppliers excessively.
Adani Power, one of India’s largest energy companies, operates a dedicated 1,600 MW power plant in Jharkhand, India, with two 800 MW units supplying electricity directly to Bangladesh. Presently, only one unit is in operation, providing Bangladesh with approximately 500-600 MW. Despite the current review, Adani has stated it is aware of the investigation but has not received official notification from Dhaka.
Mounting Debts Affect Indian Suppliers
Alongside Adani Power, Indian energy companies such as SEIL Energy India and PTC have faced substantial delays in receiving payments from Bangladesh. SEIL Energy India, which supplies 250 MW directly from Andhra Pradesh and an additional 200 MW through PTC, has received a partial payment of $30 million but remains owed $180 million.
Bangladesh’s Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010, a policy intended to speed up electricity generation and delivery, provided the legal framework for many of the contracts. Initially adopted to meet growing energy demands and expedite project approvals, the Act allowed bypassing some regulatory reviews to ensure a quick, uninterrupted power supply. However, this fast-tracking may have led to agreements that now require closer scrutiny.
Dhaka’s Response and Future Outlook
Despite financial strain, Bangladesh continues to seek a balanced approach, negotiating with Indian energy firms to keep power supplies stable while also working within its limited resources. The country’s foreign reserves have tightened considerably, affecting its ability to make full payments to its international creditors.
Ongoing discussions between BPDB and Indian suppliers are taking place in an attempt to find mutual understanding and avoid any drastic disruptions to Bangladesh’s power supply. Officials on both sides acknowledge the importance of uninterrupted power to Bangladesh’s economy and have indicated that supply cuts are unlikely, given the critical nature of existing agreements.
High Court’s committee is expected to deliver its findings in the coming months, a report that may clarify whether Bangladesh will pursue renegotiation or modifications to existing contracts. For now, the Bangladeshi government remains committed to managing debt repayments carefully, even as it navigates the difficult financial landscape posed by its foreign reserve constraints.
