Adani Power Jharkhand Limited’s claim of unpaid electricity bills has been contested by the Bangladesh Power Development Board (PDB). PDB claims that it was overcharged by $141 million due to its coal pricing strategy. Although the PDB thinks that the true amount owed is approximately $630 million, Adani claims that PDB owes $771 million.
Farzana Mamtaz, the secretary of the Power Division, said that “we disagree with Adani’s pricing formula.” We are paying what we believe is appropriate. Twice in January, the PDB wrote to Adani to voice concerns about late payment fees and to ask for an explanation for the exorbitant charges.
Increasing Obligations and Payment Problems
As a result of Bangladesh’s protracted dollar problem, Adani owed $840 million as of October 2024. Adani once threatened to turn off the power if payments weren’t received by November 7th. The debt of the power and energy sector as a whole reached Tk50,000 crore in October, of which Tk45,500 crore was associated with electricity.
Adani has received almost $400 million from the PDB in the last six months, and the company still pays $80 to 85 million every month. As summertime electricity demand rises, this is anticipated to soar to $100 million. Due to the rising heat, Adani has been exporting more electricity to Bangladesh. Last week, it supplied 1,450–1,500 MW, with a peak of 1,511 MW on March 18.
Why the PDB-Adani Dispute?
Adani is allegedly using coal price computations inappropriately, according to the PDB. Adani was mandated by the agreement to utilize the Indonesian Coal Index (ICI) and the Australian Newcastle index. Adani is allegedly raising expenses by employing additional indexes (ICI2 and ICI3) in addition to the agreed-upon ICI1.
Coal price reductions are another problem. Adani began offering these reductions in 2023 but ceased doing so in the middle of 2024. “Instead of paying our dues, the PDB is demanding discounts,” an Adani official stated. Before we talk about discounts, let them settle the payments.
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Negotiations are under progress
High level meetings are anticipated following Eid-ul-Fitr, according to PDB Chairman Md. Rezaul Karim, who confirmed talks with Adani to settle the matter. Adani’s answers to the PDB’s two previous letters asking for price clarifications were inadequate.
According to a government review committee, Adani’s pricing strategy raises the cost of electricity. Adani also levies a 2% monthly late payment fee, which adds up to 27% yearly. According to a 2017 agreement, Adani has charged the PDB $50 million in late payment costs since operations started in April 2023.
Efforts to lower electricity costs
The Power Development Board (PDB) is actively working to lower electricity costs through strategic measures. In order to reduce electricity costs from the 1,600MW Godda power project, a government review committee has suggested that the PDB renegotiate coal tariffs with Adani. Adani promised Bangladesh in 2023 that its electricity costs would be less than those of competing plants. But in FY 24 the price per unit from Godda was Tk14.87, whilst the electricity from the Payra power plant was Tk11.83. The increased price has sparked worries about affordability and Bangladesh’s financial strain. The PDB hopes to increase the cost-effectiveness of power and fulfill its promises of competitive pricing by achieving higher coal prices.
Conclusion
The dispute over electricity costs highlights the need for fair pricing and sustainable agreements. With the government urging PDB to renegotiate coal prices, securing a lower tariff from Adani’s Godda plant is crucial for affordability. Ensuring competitive pricing will reduce the financial burden on Bangladesh and support long-term energy stability. A successful negotiation could lead to lower electricity costs, which is benefiting both consumers and the economy. It is essential for all who are involved to reach a mutually beneficial agreement to guarantee an affordable and reliable power supply for the people of Bangladesh. While fostering a sustainable energy for the future.
