Adani Power's India Grid Plan Gains Urgency Amid Bangladesh Tariff Dispute
The urgency for Adani Power Ltd to connect its coal-fired plant in Jharkhand's Godda to India's power grid has intensified following allegations from Bangladesh that the company is charging above-market rates for electricity. This development comes as a committee set up by Bangladesh's interim government reviews power supply deals signed under the previous administration.
Grid Connectivity as a Financial Safeguard
While the Godda plant is currently linked only to the Bangladesh grid, Adani Power has received approval to connect to the Indian grid as well. The company had initially indicated that this connection would be completed by December 2025, but it remains pending. S.B. Khyalia, CEO of Adani Power, stated in an October analyst call that connectivity was expected by that deadline, though the company has not provided an update on the current status.
A person familiar with the development mentioned that grid connectivity is imminent, especially since all necessary approvals have been secured. However, this connection would only provide partial relief to Adani Power's financials if the deal with Bangladesh sours. The company can supply power to India under two specific conditions: if Bangladesh persistently fails to schedule power or defaults on payments, as clarified by Khyalia.
Bangladesh's Allegations and Financial Implications
Bangladesh's National Review Committee (NRC) has accused Adani Power of exporting electricity at prices approximately 50% above market rates. According to their report, Bangladesh pays $0.135 per unit (₹12.3) for power from the Godda plant, whereas Adani Power sold electricity in India's merchant market at an average of ₹5.37 per unit in the first half of FY26.
This $1-billion-a-year deal, signed in 2017 for 25 years, is vital for Adani Power, contributing over ₹8,300 crore in annual revenue and more than ₹4,800 crore in EBITDA. It accounts for over 14% of the company's FY25 revenue and nearly a fifth of its EBITDA, making it a cornerstone of its financial health and, by extension, the Adani Group's stability.
Scrutiny and Potential Fallout
The NRC's report highlights that the approved tariff for Adani was the highest among comparable electricity import contracts from India at the time of signing, with subsequent escalations exceeding peer contracts by a substantial margin. The committee, which includes experts like former high court judge Moyeenul Islam Chowdhury and economics professor Mushtaq Husain Khan, alleges that this indicates specific contractual choices rather than inherent costs of cross-border power trade.
Bangladesh has also accused Adani Power of not passing on Indian tax incentives that should have lowered tariffs and has disputed coal cost calculations, claiming prices are higher than market levels. Despite these allegations, Adani Power has emphasized its role as a key partner in Bangladesh's energy sector, meeting about 10% of the country's power demand with reliable and competitively priced electricity.
Financial Exposure and Recent Developments
Cash flows from the 1.6GW Godda plant remain exposed to risks such as payment delays, potential renegotiation of the power purchase agreement, and legal uncertainty following scrutiny by the Bangladesh High Court. Although pending dues from Bangladesh had reached as high as $800 million last year, consistent recent payments have reduced this deficit to only 15 days of delayed payments as of October.
An Adani Group spokesperson stated that the company has not received any communication regarding the NRC report and was not approached by Bangladeshi authorities for input. They urged the Bangladesh government to liquidate dues promptly, as delays impact operations.
Broader Context and Market Impact
This setback in Bangladesh follows recent legal challenges for the Adani Group, including a US Securities and Exchange Commission request to serve summons to Gautam Adani and his nephew, Sagar Adani, related to bribery allegations involving solar power contracts. These developments have contributed to market volatility, with Adani Group shares losing significant value in recent trading sessions.
As the situation unfolds, the timely connection to India's grid could serve as a critical buffer for Adani Power, mitigating some financial risks while the company navigates the complexities of international power agreements and regulatory scrutiny.
