BB approves $1.12b payment to Adani Power

The Bangladesh Bank has approved over $1.12 billion to pay Adani Power (Jharkhand) Ltd (APJL) – owned by Indian businessman Gautam Adani – to cover electricity charges from June 2023 to May 2024, under a purchase deal with the company.

Sonali Bank sources confirmed the matter to The Business Post, and this correspondent has obtained a copy of the relevant document. Insiders say Bangladesh will spend more than $1 billion every year to purchase electricity from Adani.

Between June 2023 and May 2024, energy costs reached $664.73 million, and capacity charges reached $456.55 million. The total amount of payment stands at $1,121.28 million up to May 2024.

Sonali Bank, which opens the letter of credit (LC) for making payments to Adani, has sought more USD from the Bangladesh Bank.

On condition of anonymity, a senior official of Sonali Bank told The Business Post, “We want USD from the central bank to pay Adani, because we do not have enough USD in hand to cover the payment. The central bank has already agreed to support us.

“Most of Adani's payments are now deferred due to the ongoing USD shortage. We hope that the payments will be cleared gradually.”

Insiders say the Adani agreement would have been better if its costs were less than the project of Rampal power plant and Payra power plant.

Professor of Bangladesh University of Engineering and Technology (BUET) and energy specialist Dr Ijaz Hossain said, “Bangladesh is now facing difficulties with coal imports, USD shortages, and capacity and environmental issues. Under such circumstances, Adani’s project is better than the country’s own coal fired power plant.

“Adani’s electricity is comparatively cheaper than such power plants. The power project could have been established in our country. On the other hand, we should review whether we really need a lot of power projects in our country?”

Dr M Tamim, a professor at the Department of Petroleum and Mineral Resources Engineering in BUET, said, “The BPDB says Adani’s electricity is cheaper than the Rampal and Payra power plants, so it is good for the country.”

Bangladesh started receiving electricity from India’s Adani Group in April 2023, on a commercial basis, under a 25-year power purchase agreement, as the Bangladesh Power Development Board (BPDB) issued the commercial operation date (COD) to unit-1 of the Adani Godda 1,600MW thermal plant.

Initially, Adani had started its power exports to Bangladesh in March 2023, on a test basis.

According to official sources, the state-owned BPDB approved a commercial operation date (COD) following its inspection by a three-member technical team, headed by a superintendent engineer (energy audit).

In 2017, the Bangladesh government signed an agreement with Adani. In 2020, the Indian conglomerate started the construction of a power plant in Godda, Jharkhand state.

According to the BPDP, until February this year, Bangladesh had a 26,504MW power generation capacity, whereas 11,600 MW or 4.38 per cent is imported. The maximum average generation in winter is over 10,000 MW, and in summer it is above 15,000MW.

Maximum demand was 17,100MW in FY23.

Bangladesh has not seen much load-shedding since the last few years due to balance of generation and demand. However, due to USD shortage and inability to import energy on time, a maximum load shedding of around 2,000MW occurred in May last year.