Bangladesh Faces $500 Million Power Debt Crisis with Adani

COLOMBO (News 1st); Bangladesh's new government, led by Nobel Peace Prize laureate Muhammad Yunus, is grappling with a $500 million backlog in overdue payments to India's Adani Group for a contentious power project. 

The debt is threatening to create an early crisis for Yunus's administration, which took over after student protests ousted former Prime Minister Sheikh Hasina.

Yunus's government attributes the financial strain to opaque and costly infrastructure deals made under Hasina, including the agreement with Adani to supply coal power from its 1,600-megawatt Godda plant in India. Adani Power has warned that the situation is "unsustainable" and continues to supply power despite mounting dues.

Bangladesh's total power liabilities have reached $3.7 billion, with $492 million owed to Adani alone. The interim government is seeking loans from international lenders, including the World Bank, to stabilize its finances.

Critics argue that Hasina's measures to expedite projects facilitated corruption, exacerbating the country's energy shortages. 

Yunus's administration plans to reintroduce competitive bidding and re-examine previous energy deals to ensure cost-effectiveness and transparency.

Yunus’s government has said it does not want to upset relations with India or China. 

The Export-Import Bank of China, for example, helped finance the Banshkhali power plant built by Bangladesh’s S Alam Group, whose chair is now being investigated for money laundering.

Despite the financial challenges, Adani has stated it will not divert power supplies away from Bangladesh.

Source: FT