Bangladesh is facing a big challenge over an unpaid energy bill of nearly $500 million owed to India, and it’s putting pressure on the country’s new interim government. The Financial Times (FT) recently reported that Bangladesh is rethinking its energy deals, particularly one involving Indian conglomerate Adani Group.
The Background
For years, Bangladesh has been buying power from India, especially from Adani’s coal-powered plant in Jharkhand. This deal was signed back in 2015 when Indian Prime Minister Narendra Modi visited Bangladesh. The agreement promised a steady supply of electricity to Bangladesh for 25 years. Power deliveries started last year through a dedicated transmission system.
However, things haven’t gone as planned. Bangladesh is now behind on payments, and Adani is owed around $800 million in total. The country’s overall power-related debt stands at a staggering $3.7 billion.
What’s Happening Now?
Bangladesh recently went through a political shake-up after a Color Revolution. Prime Minister Sheikh Hasina stepped down after protests erupted across the country, leading to the formation of an interim government. Nobel Peace Prize-winner Muhammad Yunus is now heading this temporary government, and one of his first moves is to review all major deals, including the one with Adani. The new administration believes many of these agreements, signed under Hasina’s rule, are too costly and not transparent enough.
According to Muhammad Fouzul Kabir Khan, an energy adviser to the interim government, the country’s financial problems can be traced back to these expensive deals. The new leadership is even seeking loans from global institutions like the World Bank to stabilize the economy.
Strained Ties with India
The political change in Bangladesh has also caused tension with India. While Adani Group says it’s in constant communication with the new government, the unpaid bill is putting a strain on relations. Despite the financial troubles, Adani continues to supply power to Bangladesh, with its CEO, SB Khyalia, describing the power plant as a “symbol of friendship” between the two countries.
However, Bangladesh’s opposition parties are pressuring the government to reconsider its ties with India, even going as far as asking India to extradite former Prime Minister Sheikh Hasina, who has been living there since stepping down.
Criticism of the Deal
From the beginning, this energy deal with Adani has faced heavy criticism. Hasina’s political opponents and several Western think tanks argue that the power supplied by Adani’s plant is far more expensive than what Bangladesh could generate on its own. A U.S.-based report back in 2018 even called the agreement a poor choice for Bangladesh, saying it was too costly and not a good long-term fit for the country’s needs.
Bangladesh’s Energy Crisis
Despite years of economic growth, Bangladesh is struggling with power shortages. The country has the capacity to generate much more electricity than it actually uses—about 24,000 MW compared to the 13,500 MW it needs. However, many of its power plants are sitting idle because of the rising prices of imported oil and coal.
Bangladesh has also been working with Russia to build a nuclear power plant that will provide cheaper, cleaner energy. This $13 billion project is nearing completion and is expected to be up and running next year.
What’s Next?
As Bangladesh deals with its mounting energy debt, all eyes are on Muhammad Yunus and his interim government to see how they will navigate these tough decisions. The stakes are high: rethinking energy deals with India could reshape the country’s future, but it could also worsen relations with a key neighbor. At the same time, Bangladesh must find a way to balance its energy needs with its financial constraints, or risk falling deeper into crisis.
This situation is not just about power bills—it’s about the future direction of the country, its economy, and its relationship with its biggest neighbor, India. What happens next could change the course of Bangladesh’s energy strategy for years to come.
