Adani requests FinMin to quickly clear electricity bills

India's Adani Group Director Pranav Adani has requested Finance Minister Abul Hassan Mahmood Ali to quickly clear the outstanding electricity bills, amounting to around $700 million, that Bangladesh owes to the company.

Pranav Adani met the finance minister with a five-member delegation at the Secretariat this afternoon (29 May).

Sources say that earlier, Adani Group had contacted the Power Division regarding the payment of dues.

An official present at the meeting told TBS that the investment of Adani Group in Bangladesh's energy and agriculture sectors was also discussed.

Pranav Adani is also the managing director of Adani Agro, Oil & Gas.

Power Division Senior Secretary Md Habibur Rahman told TBS, "Adani Group is urgently seeking their dues. The Power Division is trying to bring down the arrears within two months."

He said, "Currently, there are arrears of five months amounting to around $600 to $700 million. But generally bills cannot be issued in less than 45 days, and bill submission also takes another 15 days. As a result, two months of arrears are normal."

The Bangladesh Power Development Board (BPDB) signed a power purchase agreement with India's Adani Group in 2017 to meet the country's power demands. As part of this agreement, Adani Group has set up a coal-based power plant in Jharkhand, India, from which Bangladesh is supposed to receive 1,500MW of electricity.

According to the agreement, Bangladesh will buy electricity from the power plant for 25 years. Adani Group has been supplying electricity to Bangladesh since July last year. On 28 May, the BPDB received 816MW of electricity from Adani's power plant.

Additionally, Bangladesh owes an outstanding electricity bill of Rs150 crore to the Tripura State Electricity Corporation Limited (TSECL) of India.

Power Division officials say that besides the non-disbursement of subsidies for payment of dues to foreign power suppliers, the dollar crisis and the increase in the price of the dollar are also contributing to the growing arrears of foreign power suppliers.

The PDB sells power at a lower price than the one it buys from power companies. In this case, the deficit in the purchase and sale is subsidised by the government. However, the Finance Division has not been able to pay this subsidy on time since the onset of Covid-19 due to the lack of improvement in revenue collection.

As a result, nearly Tk30,000 crore of subsidy is currently pending. Although Tk39,000 crore has been allocated for electricity subsidy in the budget of the current financial year, it has not been released. Additionally, the government has issued a Tk15,000 crore bond to repay bank loans of power plants in the country.

According to sources, to ensure an uninterrupted supply of electricity, the Ministry of Power sent a letter to the Finance Division in April this year requesting the release of the subsidy for the BPDB from the revenue budget of FY24.

As per the letter, Tk17,701 crore would be required for four months (March-June 2024) of subsidy. Of this, foreign outstanding bills amount to about $103 crore, and domestic outstanding bills amount to about Tk9,000 crore.

According to sources, as of last February, the outstanding bills of the country's private power plants stood at Tk27,000 crore.