Bangladesh’s efforts to clear debts of more than $1 billion owed to Indian power companies are being hampered by its inability to access the dollars it requires to pay them, documents showed and sources familiar with the matter said.
The country has been struggling to pay its bills due to costly fuel and goods imports since the war in Ukraine began in 2022, while political turmoil which led to the ouster of Prime Minister Sheikh Hasina in August has added to its troubles.
Bangladesh is urgently seeking $5bn in financial aid from international lenders to stabilise its dwindling foreign exchange reserves and its central bank has raised key interest rates to tame soaring inflation. Last year, it sought a $4.7bn bailout from the International Monetary Fund.
“Efforts are on to clear the outstanding payments, but the current dollar crisis is complicating the process significantly,” an official at the Bangladesh Power Development Board (BPDB) told Reuters on Friday.
Of the more than $1bn owed to India’s power companies, some $800 million is to Adani Power, he added. Adani Power did not respond to a request for comment.
PTC India and SEIL Energy India Ltd have written to the BPDB to recover about $80m and $190m respectively in payment for the power they provided to Bangladesh, documents reviewed by Reuters show.
“PTC has a long term business relation of supplying power to BPDB since 2013 and the power supply under [the] current contract is from 2022,” a PTC India spokesperson said.
A SEIL spokesperson said it had informed the Bangladesh authorities about what it called an “unsustainable situation”.
Bangladesh, which imports nearly 20 per cent of its power from its neighbour India, has not paid for the electricity for the last eight to nine months, a source told Reuters. SEIL received a contract in 2018 from BPDB to supply power to Bangladesh over a total period of 15 years.
“While we continue to supply power to Bangladesh, we remain hopeful the concerned authorities will uphold the contractual terms and expedite the clearing of the dues so that power supply can be sustained,” SEIL said in a statement.
SEIL and PTC India have bank guarantees relating to their power contracts with Bangladesh for $34.1m and $30.7m, respectively, the documents show.
This has left Bangladesh’s Rupali Bank trying to access dollars to settle a payment of about $270m, as otherwise, the Indian companies plan to cash the guarantees.
Rupali Bank and BPDB are working “together for the necessary US dollar resources from (the) Bangladesh Central Bank for the purpose of paying bills in foreign currency, which will continue in the future,” the documents show.
PTC India declined to comment on the specifics of the terms and conditions of the contract, while calls to Rupali Bank went unanswered due to a weekend holiday in Bangladesh.
