Indian utility threatens to cut electricity if Bangladeshi dues not paid

Today is the deadline set by the Indian company Adani Power for Bangladesh to settle its outstanding debts, or the company will halt electricity supply.

This dispute stems from delays in payments totaling approximately $850 million for electricity provided by Adani’s Godda plant in Jharkhand, which supplies a significant portion of Bangladesh’s power. Bangladesh’s struggles to secure the necessary letter of credit and its ongoing dollar shortage have delayed payments, pushing Adani to reduce supply since October 31. The Godda plant is Bangladesh’s largest foreign-supplied energy source, and the reduction in power supply exacerbates an already dire energy crisis in the country.

For India, a protracted payment crisis could encourage a revaluation of its energy export strategy, which may affect its standing with Bangladesh. For instance, Adani Power’s Godda plant is considering prioritizing more stable domestic buyers to replace Bangladesh. India is a key regional energy supplier to other neighboring countries like Bhutan, Nepal, and Sri Lanka. Disruptions in power supply could not only destabilize Bangladesh’s economy but also present an opportunity for other powers like China to hamper India’s regional influence by stepping in with more favorable terms to fill Bangladesh’s energy void.

The dispute also highlights vulnerabilities in Bangladesh’s energy dependence on India and risks further destabilizing the already-tumultuous nation. Bangladesh has been experiencing economic, political, and social upheaval following the recent ouster of former Prime Minister Sheikh Hasina. Should the energy crisis get worse, expect a high likelihood of additional protests, social unrest and economic tumult for the foreseeable future.