How the dispute surfaced
India’s Adani Power Ltd has formally triggered international arbitration to resolve a months-long payment and tariff dispute with Bangladesh’s state power buyer over electricity supplied from the 1,600-megawatt Godda plant in Jharkhand, the company said in a statement seen on Sunday. Adani argues that the power purchase agreement (PPA) signed in 2017 clearly sets out how fuel, tax benefits and other pass-through costs are to be billed, and that recent delays or reductions in payment from Dhaka breach those terms. Bangladeshi officials have publicly said they were still trying to settle some “calculation differences,” but the arbitration move raises the stakes because it takes the issue out of routine commercial talks and into a treaty-like process that both sides must answer. The plant is important for Bangladesh because at times it has covered close to a tenth of national demand — so even a paper dispute can make lenders and future project developers nervous.
What it means for cross-border power deals
Energy analysts in New Delhi and Dhaka told Nikkei Asia that the case will be watched across South Asia, where several countries are lining up Indian private producers to supply baseload power across borders. If payments in hard currency are delayed, or if a buyer later challenges how tax holidays were used, it can squeeze the project’s debt service and force sponsors to seek arbitration, which adds cost for everyone. For Bangladesh, which is trying to balance high fuel import bills, a weakening taka and public pressure to curb power tariffs, the episode is a reminder to update its standard PPA templates with clearer language on forex risk, sovereign guarantees and dispute-timelines. Both sides have said they still “value the relationship,” so an eventual settlement is likely — but it will come with lessons for any future large coal or LNG-linked imports Bangladesh wants to source from India.