Power Crisis Looms: Indian Companies Struggle With $1 Billion In Unpaid Dues Amid Bangladesh's Political Unrest

The ongoing political unrest is exacerbating the challenges faced by Indian power companies.

According to a report in the Economic Times, five Indian power companies supplying electricity to Bangladesh are collectively owed more than $1 billion.

Of this amount, approximately $800 million is owed to Adani Power, which supplies power from the 1,600 MW Ultra Super-Critical Thermal Power Plant (USCTPP) in Godda, Jharkhand.

In an interview with Bloomberg, Bangladesh’s newly-appointed central bank governor, Ahsan H Mansur, confirmed that Bangladesh owes Adani Power $800 million (about Rs 6,710 crore) in unpaid dues for electricity supplied from the Godda plant.

Adani Power had signed a 25-year power purchase agreement (PPA) with the Bangladesh Power Development Board (BPDB) in November 2017 to supply 1,496 MW of power from the Godda plant to Bangladesh via a dedicated 400 kV transmission line.

The Godda plant, operational since June 2023, is India’s first transnational power project, with 100 per cent of the generated power exported to another country.

Similarly, Independent Power Producer (IPP) SEIL Energy India Limited (SEIL) is owed approximately $150 million as of 30 June 2024. The company has a power purchase agreement with Bangladesh for 250 MW. State-run NTPC, which supplies around 740 MW from three of its plants, is owed nearly $80 million.

Power trading solutions provider PTC India reported that, as of the end of March, it was owed about $84.5 million. By 25 August, the company had received $46 million, leaving $79 million still due from Bangladesh.

The company has been supplying 250 MW of power to the Bangladesh Power Development Board (BPDB) from the West Bengal State Electricity Distribution Company Limited since 2013, following successful participation in an international competitive bidding process conducted by BPDB. Power Grid Corporation of India is owed $20 million.

Despite these outstanding dues, all these companies have continued to supply power, underscoring the strong bilateral ties between the two nations. However, one source cautioned that this situation cannot persist indefinitely, as the companies must answer to their stakeholders.

"We need a solution soon, or we will struggle to continue supplying power, especially when lenders, coal suppliers, and other service providers require upfront payments," said an executive from one of the power companies.

Bangladesh's power lifeline continues to flow from India, with the latest BPDB data revealing that the country imported 2,656 MW of electricity in 2022-23 — all from India. The Adani Group’s Godda plant alone supplied 1,496 MW, accounting for a staggering 56 per cent of this total.

It’s worth noting that two weeks ago, the Ministry of Power amended its rules on the export of power, allowing power-exporting companies to also sell within India in certain cases.

The amendment, dated 12 August, revises the 2018 guidelines by allowing power exporters to connect to the Indian grid if the importing country fails to utilise the plant's full capacity for an extended period, or delays or defaults on payments to the company.

This new rule, introduced shortly after Sheikh Hasina sought refuge in India amid massive protests, appears to provide a safeguard for these export companies, offering protection from potential disruptions in their long-term agreements with Bangladesh.