MUMBAI: Adani Group’s power supply deal with Bangladesh is under scrutiny, with a $500 million outstanding bill potentially complicating matters.
The interim government, led by Nobel laureate Muhammad Yunus, is reportedly reconsidering several infrastructure deals made during the tenure of the ousted Prime Minister Sheikh Hasina.
A Financial Times report highlights that the Yunus government has criticized the costly infrastructure agreements signed under Hasina’s administration, including the controversial deal with the Adani Group to supply coal-powered electricity from its 1,600 MW Godda plant in India.
Norms bypassed
Any irregularities discovered during the review of this agreement could jeopardize the deal’s future, potentially straining relations between India and Bangladesh and creating political repercussions within India.
The Modi and Hasina governments had maintained strong ties, with Hasina reportedly seeking refuge in India during mass protests in her country.
However, there has been significant domestic criticism in Bangladesh regarding how the deal was awarded, allegedly bypassing open tenders, leading to accusations of corruption and inefficiencies.
Situation unsustainable
The Adani Group has informed Bangladesh that the growing backlog of unpaid bills, now totaling $500 million, has made the situation unsustainable for the company.
Despite this, in a statement to the Financial Times, the group reiterated its commitment to continue supplying power to Bangladesh. They emphasized ongoing discussions with the Bangladesh government, highlighting their efforts to meet obligations to the country, their lenders, and suppliers, even amid financial strain.
$3.7bn outstanding
The company clarified that there are no plans to divert the power supply to other destinations. Since the Godda plant is not connected to the Indian grid, selling electricity in the domestic market is not an option.
Bangladesh owes a total of $3.7 billion to power suppliers, with $800 million owed to the Adani Group, of which $495 million is overdue, according to Kabir Khan, power advisor to the Yunus government.
The government is reportedly seeking financial assistance from global lenders, including the World Bank.
