BPDB to pay Adani dues as arbitration looms

The Bangladesh Power Development Board (BPDB) has been directed to pay arrears to India's Adani Power to ensure uninterrupted electricity supply to the national grid, even as disputes over pricing and contractual obligations move toward international arbitration.

"We are going to pay the arrears to Adani as we purchased electricity from "We are going to pay the arrears to Adani as we purchased electricity from them. However, we are set to pay half of the total amount right now," Adviser to the Power, Energy and Mineral Resources Fouzul Kabir Khan said on Monday night.

Power imports from India, particularly from Adani's Godda plant, faced disruptions following the ouster of former Prime Minister Sheikh Hasina amid a student-led uprising last year. The Adani plant had warned it might halt supply from November 11 unless dues were cleared. BPDB had already paid $437 million of Adani's dues in June.

The 25-year deal obliges Bangladesh to buy all electricity generated by Adani's 1,600 MW coal-fired plant. The interim government has raised concerns over alleged governance failures and corruption in the energy sector and has said it would not hesitate to cancel the 2017 contract if irregularities are proven.

However, committee member Mushtaq Husain Khan cautioned that "Because it is a sovereign contract, it can't be terminated arbitrarily. Cancelling such agreements could expose Bangladesh to substantial financial penalties from international arbitration courts."

BPDB and Adani have now moved toward the Singapore International Arbitration Centre (SIAC). Adani has appointed a mediator and requested BPDB to nominate its own. If mediator-level talks fail, a formal arbitration process will begin.

BPDB has raised concerns that Adani's tariff, linked to imported coal prices, is inflated, late-payment surcharges of 2 per cent monthly are excessive, and tax exemptions granted in India were not passed on to Bangladesh. 

"We sat with Adani Power several times over the past few months but made no progress in addressing our concerns," BPDB Chairman Md Rezaul Karim said. Adani claims total dues of $900 million, which BPDB considers overstated.