India was considering extension of a loan of about $2 billion to Bangladesh to help the country meet its dues to Indian power companies, including Adani Power, but with the ouster of the Sheikh Hasina government the talks were suspended, sources have said. No moves have yet been made to renew the loan negotiations with the new interim government led by Muhammad Yunus.

“The past government in Bangladesh led by Sheikh Hasina was negotiating a loan with the Indian government to meet its power sector dues to Indian companies, primarily Adani Power. An interest subsidy of about 2 per cent was also under consideration to make things easier for it. However, the talks have fallen through after Hasina’s ouster,” a source tracking the matter told businessline.

Nobel Peace prize winning economist Muhammad Yunus formed an interim government in Bangladesh on August 8 2024 after former PM Hasina was forced to flee the country amidst wide-spread protests against her government led by students and the public.

Bangladesh has been struggling to pay its import bills, including power dues, for some time as it is facing a dollar crisis especially with costs going up since the Russia-Ukraine crisis started in 2022.

Adani Power, which had been exporting electricity to the country from its dedicated 1,600-megawatt (MW) power plant in Jharkhand, reportedly reduced its supplies further this month as it tried to recover its dues which may have surpassed $800 million.

However, the company lifted its November 7 payment deadline for payment of the dues, failing which it had warned of a stoppage of power supply, as it is in talks with the Bangladesh government for expedited clearances, per reports.

Apart from Adani Power, there are about four other Indian power companies that provide electricity to Bangladesh which are facing outstanding dues. These include SEIL Energy, NTPC, PTC and Power Grid, according to industry sources. However, Adani Power’s dues are the largest by far.

“A $2 billion loan from India could have helped Bangladesh immensely in paying off its dues. In a way it is good for the Indian government that the loan did not get through as it may have been difficult to trace the money after the fall of the Hasina government,” source pointed out

But there are no indications that the Yunus government had tried to revive talks for the proposed loan yet, they added.

Bangladesh imports about 10 per cent of its total power requirement from India and its officials have expressed concern on this dependence. While the country may want to re-negotiate some its power purchase agreements with India for better terms in the future, but it is expected to continue its power purchases from India as it doesn’t have many options, industry sources pointed out.

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