Adani Power Opts for Arbitration Against Bangladesh Over Payment Dispute

Adani Power has initiated an international arbitration process with the Bangladesh Power Development Board (BPDB) to settle disagreements over electricity payment calculations. The 2 sides have been in talks over how certain cost components under their 2017 power purchase agreement (PPA) are billed.

Adani Power Background

Adani Power supplies electricity to Bangladesh from its 1,600 megawatt (MW) coal-based Godda power plant in Jharkhand. The plant contributes nearly one-tenth of Bangladesh’s total electricity supply. The company said it continues to supply power as per the contract and receives payments acknowledged by BPDB.

Dispute Details

The issue arises from differences in how certain cost elements are calculated. Adani Power said both parties have agreed to trigger the dispute resolution clause outlined in their agreement. “There are disagreements in the way certain cost elements are calculated and billed,” the company said in a statement, adding that arbitration would help achieve a smooth settlement.

Bangladesh’s Response

Bangladesh’s acting power minister Muhammad Fouzul Kabir Khan confirmed that discussions between both sides are still ongoing. He said arbitration will be considered only if the current round of negotiations fails to resolve the issue.

Payment Status and Tariffs

Bangladesh paid Adani Power a tariff of 14.87 taka ($0.1220) per unit for the fiscal year ending June 2024. This is higher than the average rate of 9.57 taka paid to other Indian power suppliers. The interim government had earlier alleged that Adani Power withheld certain tax benefits from the Godda project, which they said violated the terms of the PPA.

Adani Power recently reported a sharp drop in pending dues from Bangladesh. Outstanding payments have come down from nearly $2 billion earlier this year to about $900 million in May, and are now equivalent to around 15 days of tariff.

Read More: Adani Enterprises Plans to Raise ₹25,000 Crore via Rights Issue for Strategic Growth!

Adani Power Share Price Performance 

As of November 4, 10:09 AM, Adani Power share price was trading at ₹156.99, a 0.17% increase from the previous close.

Conclusion

Both Adani Power and BPDB have agreed to go ahead with the arbitration process to resolve the matter. Power supply from India to Bangladesh continues as discussions proceed.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.