Adani Power has formally initiated international arbitration against Bangladesh to resolve a prolonged dispute over outstanding payments for electricity supplied under a 2017 power purchase agreement.

The disagreement pertains to the calculations and billing of certain cost components under the contract between Adani Power and the Bangladesh Power Development Board (BPDB). This development comes after months of stalled negotiations and partial payments, with the issue now moving towards a formal legal resolution.

The dispute centres on payments owed for power supplied from Adani's 1,600 MW coal-fired Godda plant in India, which provides about 10% of Bangladesh's electricity needs. Bangladesh's interim government, led by Nobel laureate Muhammad Yunus since 2024, has challenged the payment obligations, citing concerns over contract terms and accusing Adani of failing to pass on tax benefits received from the Indian government.

Bangladesh's financial challenges, including a strained foreign exchange position and high import costs, have further complicated timely payments, leading to mounting dues.

Adani Power reported that the outstanding dues had decreased substantially — from nearly $2 billion early in 2025 to around $500 million more recently — following partial repayments and resumed supply. Despite these financial tensions, Adani has reiterated its commitment to supplying reliable and competitively priced electricity to Bangladesh. The company maintains that it continues to meet its contractual obligations and works actively to resolve the disagreements through dialogue.

The power purchase agreement embodied a 25-year supply deal signed during the previous government headed by Sheikh Hasina. The current administration is reviewing the contract and other similar power agreements, considering their financial sustainability and transparency.

Due to unresolved differences in cost billing, both parties agreed to trigger the contract’s dispute resolution clause, leading to the arbitration move. Bangladesh’s de facto power minister confirmed ongoing negotiations and acknowledged arbitration as a possible next step.

This arbitration pursuit by Adani reflects broader challenges in cross-border energy trade agreements where financial, political, and contractual complexities intersect. It highlights the fragility of supply agreements amid shifting political landscapes and economic pressures in developing countries. 

Resolution through arbitration is expected to provide a legally binding and impartial framework to address the contested cost elements and safeguard long-term energy cooperation between India and Bangladesh.

The dispute is a significant episode in the larger context of Bangladesh’s energy sector reforms and efforts to stabilise its economy amidst political change, while Adani aims to protect its investments and contractual interests. Both parties remain engaged in dialogues, aiming for a solution that ensures uninterrupted power supply to Bangladesh while addressing the financial and legal contentions fairly.

This case will likely set precedents for future energy trade agreements involving Indian firms and neighbouring countries, emphasising the importance of transparent contract terms and equitable dispute resolution mechanisms in international power supply contracts.​

Agencies