The recent resignation of Bangladesh's Prime Minister Sheikh Hasina has stirred discussions around the country's power dynamics, particularly concerning the power supply agreement with Adani Power Limited. Under this agreement, Adani Power is obligated to provide 1,496 MW of power over 25 years to Bangladesh through a dedicated transmission system linked to the Bangladesh grid from its Godda plant in Jharkhand. This project, operational since June 2023, plays a crucial role in meeting Bangladesh's power needs by supplying 100% of its power requirements.
However, concerns have been raised regarding the pricing of power supplied by Adani Power. In February 2023, authorities in Bangladesh expressed reservations about the excessive pricing of coal and requested a review of the agreement with Adani Power Ltd. The looming transition of power in Bangladesh has triggered speculations about the potential impact on the existing agreement, with experts emphasizing the country's urgent need for power supply and the challenges posed by volatile global gas prices.
Despite the uncertainties surrounding the political landscape and the future government's approach towards existing projects, Adani Power remains committed to fulfilling its obligations under the agreement with the Bangladesh Power Development Board (BPDB). The company continues to supply power to Bangladesh without interruptions, contributing to stabilizing the nation's power scenario by replacing costly power generated from liquid fuel. As stakeholders await the unfolding of events, analysts like Harsh V Pant from the Observer Research Foundation (ORF) highlight the importance of assessing the new government's stance on contractual obligations and the overall infrastructure projects in the country.
As the country navigates through the political transition, the fate of the power purchase agreement will largely hinge on how the new government balances public sentiment with economic realities. Former chairman and managing director of Coal India, Partha Sarathi Bhattacharyya, emphasizes the need for a pragmatic evaluation before any decision is made on the agreement, stressing the significance of considering the opportunity cost of scrapping the PPA. Amidst these deliberations, Adani Power revealed during an investor call that the monthly billing to BPDB averages around $90 million, with recent inflows reflecting steady progress in streamlining processes for payment approvals.