In brief
The ongoing financial strain and political turmoil have led Bangladesh to take urgent measures to stabilize its power supply in light of disputes with India's Adani Group, which provides a crucial portion of the nation’s electricity.
Bangladesh is facing a severe energy crisis as the Adani Group, a major electricity supplier, has drastically reduced its power supply due to an unresolved payment issue. Reports indicate that the Indian conglomerate has cut electricity by half, allegedly due to an outstanding bill of $800 million. In an effort to address the issue, Bangladeshi officials revealed that they have begun processing partial payments, having issued a $170 million letter of credit to the Adani Group.Adani Power operates a significant 1,600-megawatt coal-fired power plant in eastern India, supplying about 10% of Bangladesh's electricity. However, the company has threatened to halt all electricity deliveries entirely unless full payment is received by November 7. Despite these warnings, Bangladeshi officials express confidence that they can avert complete supply disruptions.“We are shocked and surprised that despite us ramping up payments, supplies have been cut. We are ready to repay and will make alternate arrangements, but will not let any power producer hold us hostage and blackmail us,” stated Fouzul Kabir Khan, an energy adviser to the interim Bangladeshi government. So far, payments have increased incrementally over recent months—from $35 million in July to $97 million in October.Bangladesh's struggle with power shortages is compounded by recent political instability and falling foreign currency reserves which have inhibited the payment process for electric imports. After a series of protests led to the ousting of the Sheikh Hasina administration in August, the interim government is now looking for additional support from the International Monetary Fund, requesting a new $3 billion loan on top of an existing bailout package.The power agreement with Adani, forged in 2015, is under review, along with ten other similar contracts, as the interim government seeks to reassess their cost-effectiveness. In addition to Adani, several Indian state-owned companies, like NTPC Ltd and PTC India Ltd, remain involved in electricity exports to Bangladesh, with partial payments being made to those suppliers as well.In an effort to address the shortfall, Bangladesh has also begun the restart of gas-fired and oil-fired power plants, which experts caution could further escalate energy costs. However, as the winter season approaches, fewer cooling demands from air conditioning are expected to reduce the pressure on the power grid.In a proactive approach to its energy diversification strategy, Bangladesh is gearing up to launch its first nuclear power plant in December, a significant project funded largely through long-term loans from Russia, with a total estimated cost of $12.65 billion.
