In a striking development, Bangladesh has slashed its power procurement from Adani Power, signaling growing discord between the South Asian neighbors over energy trade. Officials in Bangladesh cited reduced winter electricity demand as the reason behind the decision but hinted at underlying frustrations due to Adani’s actions earlier this year.
Winter Demand and Energy Adjustment
Bangladesh’s Power Development Board (BPDB) announced on Sunday that it would no longer require the full capacity of Adani’s plant in Godda, India. MR Karim, Chief of BPDB, elaborated, “We’ve informed them there’s no need to operate both units of the plant as our current demand does not justify it.” This statement reflects a shift in energy strategy, particularly during the colder months when electricity usage typically drops.
The adjustment has sparked debates about energy efficiency and the economic viability of the contract between Adani Power and the Bangladeshi government.
“Angry When They Cut Supply”
Tensions between Bangladesh and Adani Power escalated in October when Adani reportedly halved its power supply to Bangladesh, citing non-payment of dues worth millions of dollars. This unilateral decision left Bangladesh scrambling for alternatives, creating widespread dissatisfaction within the BPDB.
Karim admitted, “We were angry when they cut our supply. Such actions disrupt our planning and operations.” The reduced supply from Adani at a critical time likely prompted today’s retaliatory decision by Bangladesh.
A Billion-Dollar Partnership Under Stress
The Adani-Bangladesh energy agreement was hailed as a landmark bilateral deal when signed. The Godda plant, strategically located in India near the Bangladeshi border, was constructed specifically to cater to Bangladesh’s growing power needs. However, financial disagreements and operational challenges have marred the partnership.
Experts suggest that the payment delays on Bangladesh’s part stem from rising energy costs and foreign exchange issues, while Adani’s actions to halve supply only worsened the trust deficit.
Political and Economic Implications
The fallout from this energy dispute has political undertones. The strained relations between Adani Power and Bangladesh come at a time when both countries are seeking to strengthen their economic ties. The reduction in power purchase not only reflects Bangladesh’s attempt to assert its position but also raises questions about Adani’s pricing strategies.
Critics in Bangladesh have voiced concerns over the cost of electricity supplied by Adani, which they claim is higher than market rates. This sentiment has fueled public pressure on the government to renegotiate the terms of the agreement or seek alternative suppliers.
What Lies Ahead?
As winter progresses, the reduced energy consumption in Bangladesh might offer temporary relief to the BPDB. However, the larger issue of resolving disputes with Adani Power remains critical. With another summer on the horizon, where demand for electricity will peak, Bangladesh must secure its energy needs while balancing economic constraints.
On the other hand, Adani Power faces its challenges in maintaining its reputation as a reliable energy provider in the region. The recent events have placed a spotlight on the group’s dealings, prompting questions about its long-term strategy in Bangladesh and other neighboring markets.
Bangladesh’s decision to reduce its reliance on Adani could be a wake-up call for India’s energy exporters to reevaluate their partnerships and ensure that financial disagreements don’t overshadow the broader goals of economic collaboration.