Bangladesh resolves Adani's power purchase pact, payment concerns

New Delhi | Bangladesh made its single largest payment of USD 437 million in June, clearing pending dues, including carrying costs, and issues related to the power purchase agreement, reaffirming the Indian conglomerate's asset as a reliable and cost-competitive power source for meeting the country's growing energy needs, sources said.

Bangladesh is now regular in payments. Additionally, an LC (Letter of Credit) worth about two months of billing and sovereign guarantee for all dues as additional security has been established, sources aware of the matter said.

Since payment-related matters are resolved, Bangladesh has asked Adani Power to supply power from both units as per BPDB (Bangladesh Power Development Board) schedule, they added.

Sources said Bangladesh has resolved Adani Power's dues, including the carrying cost. Over the last 3-4 months, the country has been paying USD 90-100 million per month, and in June, it paid USD 437 million.

The LCs are worth about two months of billing and sovereign guarantee for all dues, as additional security has put Adani in a very comfortable situation.

Concerns raised related to investigations into the PPA by the Bangladesh authorities have been resolved, with no adverse aspects found.

With all these developments, lenders are confident of improving APL's credit rating to AA+ from the current AA.

Adani Power supplies electricity to Bangladesh from a dedicated 1600 MW plant located in Godda district of Jharkhand, meeting 10 per cent of the country's power demand. The company supplies among the most competitively priced power to Bangladesh, as is evident from BPDB's merit order dispatch data, which is an essential requirement.

Bangladesh had in the past struggled to meet its payment obligations under the 2017 deal, as rising import costs -- following the Russia-Ukraine conflict in 2022 and domestic political turmoil, which led to the ouster of the prime minister -- strained the country's finances.

As a result, Adani halved its supply last year, and full supplies were resumed in March 2025 after the country's monthly payments started covering some of the dues.

Sources said over the last three to four months, Bangladesh had started paying USD 90-100 million per month, and in June, the company received the single largest chunk of payment of USD 437 million, thereby clearing all dues.

Adani Power's Godda unit was housed under a separate subsidiary, which has now been merged with the parent, providing greater operational and financial synergy. With all these developments, lenders are confident of improving Adani Power's credit rating to AA+ from the current AA, which will further bring down its cost of funds.

The current developments vindicate the contract established between the Bangladesh government and Adani Power. The Godda asset is now well integrated into the Bangladesh Power system successfully.

Under the 2017 deal, Adani Power's Godda power plant in Jharkhand was to supply 100 per cent of the electricity generated from burning coal to Bangladesh for a period of 25 years.

After payment defaults, Adani had cut supplies by half in November 2024. It restored full electricity supply, which is around 1,600 MW, in March after the country reduced its liabilities.

Bangladesh stepped up repayments from July last year, clearing monthly dues. The development comes after the country suffered from increased power shortages in rural areas.

It has been struggling to generate sufficient dollar revenues to cover the cost of essential imports like electricity, coal, and oil. Its foreign currency reserves declined amid months of student-led protests and political unrest, which culminated in the ousting of the Sheikh Hasina government in August 2024.

The interim government that succeeded her sought an additional USD 3 billion loan from the International Monetary Fund (IMF), on top of the existing USD 4.7 billion bailout package.

Adani's power deal with Bangladesh was one of many under Sheikh Hasina, which the current interim government has called opaque. Besides Adani Power, other Indian state-owned firms also sell power to Bangladesh, including NTPC Ltd and PTC India Ltd