The political turmoil in Bangladesh that led to the ouster of its Prime Minister, Sheikh Hasina, on August 5 could potentially affect India's first transnational power supply project operated by billionaire Gautam Adani's Adani Power Ltd.
Adani Power signed a 25-year power purchase agreement (PPA) with the Bangladesh Power Development Board in November 2017 to supply 1,496 megawatts (MW) from its Godda plant in Jharkhand. The Godda power project is India's first commissioned transnational power project, where 100 percent of the generated power is supplied to another nation. The project was commissioned in June 2023 and has been providing power to Bangladesh since then.
"Adani Power has a PPA with Bangladesh's power distribution utility, Bangladesh Power Development Board (BPDB), to meet their country's power requirements," a spokesperson for Adani Power told Moneycontrol.
"In its normal course of business, BPDB is scheduling the power supply to meet their nation's demand, and as per that schedule, Adani Power continues to supply power to the Bangladesh power utility without any disruption," the spokesperson added.
The Adani Power statement said the company will follow BPDB's schedule and adhere to the provisions outlined in the PPA between the two utilities.
The implications
In an investor call on May 2 after Adani Power's March quarter earnings, Shailesh Sawa, group head of regulatory engagement, said that the Bangladesh utility's current outstanding dues were close to $400 million, or about four months of dues. Sawa further said that monthly billing for the Bangladesh power contract is about $90 million on average, and the payments to Adani Power are denominated in dollars.
Subsequently, on July 31, in its earnings call for the June quarter, Adani Power management noted that the company has started getting good payments in the last few months since all the processes are well established now.
"On average, four to five months of arrears is there for all the power suppliers of Bangladesh," the management noted.
"Entire power (of Godda plant) is going to Bangladesh. It is a dedicated power station to Bangladesh, and it is not even connected to the Indian grid," the management added.
Given the nature of the Godda power project, any shift in the stance of the new administration in Bangladesh, which is yet to take shape, could have a significant adverse impact on the project due to the outstanding dues and debt obligations incurred to set up the plant.
As of June 30, Adani Power's net debt decreased to Rs 25,653 crore from Rs 26,545 crore on March 31. The finance cost for the quarter ended June 30 fell to Rs 811 crore from Rs 883 crore in the year earlier.
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