Adani halves electricity supply to Bangladesh over unpaid bills
What's the story
Adani Power Jharkhand Limited (APJL), a subsidiary of Gautam Adani-led Adani Power, has reportedly slashed its electricity supply to Bangladesh by 50%.
The step was taken over unpaid bills worth $846 million.
The power supply was reduced on Thursday night, data from Power Grid Bangladesh PLC and reports from The Daily Star newspaper stated.
Consequences
Impact of reduced power supply on Bangladesh
The cut in power supply from APJL's 1,496 MW plant has resulted in a massive shortfall in Bangladesh.
The plant is currently operating at a reduced capacity, generating only 700 MW from a single unit.
This has caused an electricity deficit of over 1,600 MW for the country on the night between Thursday and Friday.
Warning
Adani's ultimatum to Bangladesh Power Development Board
Before cutting the power supply, APJL had warned the Bangladesh Power Development Board (PDB).
In a letter dated October 27, the company asked PDB to clear its dues by October 30 or face power supply suspension.
The letter also noted that PDB had neither provided a Letter of Credit (LoC) of $170.03 million from Bangladesh Krishi Bank nor cleared the pending amount of $846 million.
Counterclaim
PDB's response to Adani's charges and payment issues
Responding to Adani's charges, a PDB official said while some past dues were cleared, Adani has been billing more since July.
The official said PDB is paying roughly $18 million weekly against a charge of over $22 million. This difference has resulted in an increase in due payments.
The official also said last week's payment was made to Krishi Bank but due to dollar shortage, the bank couldn't open an LoC against the payment.
Pricing dispute
Adani's coal pricing and PDB's supplementary deal
The PDB official also spoke about a coal pricing dispute with Adani.
In February last year, a supplementary deal was signed which mandated Adani to quote coal prices lower than other coal-fired power plants.
However, after the one-year term of this deal, Adani started charging as per the Power Purchase Agreement (PPA).
The PPA calculates coal prices on the basis of the average price of two coal indices - the Indonesian Coal Index and the Australian Newcastle Index.
Company's position
Adani's stance on suspension and recovery of payments
Adani has clarified that during the suspension of supply, it retains the right to recover capacity payments under Section 13.2(1) of the PPA.
The company has been urging Bangladesh's interim government to settle the dues since they assumed power after the removal of former Prime Minister Sheikh Hasina.
Adani, Chairman of Adani Group, has also written to Chief Adviser Yunus regarding this matter.