Bangladesh Crisis: Impact on Adani Power, NTPC, and Indian Energy Giants

The ongoing unrest in Bangladesh is poised to impact Indian power companies operating in the neighboring country. Notable listed companies with exposure to the Bangladeshi market include Adani Power, NTPC, and Power Grid, among others. Bangladesh, with a total power capacity of 25 GW, faced a peak demand of 15 GW in the fiscal year 2023, and imported 12% of its electricity needs from India.

Key Power Suppliers to Bangladesh

Significant entities supplying power to Bangladesh include NTPC subsidiary NVVN, PTC India, Sembcorp Energy India, and Adani Power. These companies, having operations in Bangladesh, are likely to feel the effects of the ongoing crisis.

List of Power-Related Companies with Bangladesh Exposure

1. NVVN (NTPC subsidiary)
2. Power Grid Corporation of India Ltd. – Minimal exposure with Rs 100 crore in annual revenue
3. PTC India
4. Sembcorp Energy India
5. Adani Power
6. REC
7. PFC

Minimal Impact on Power Grid Corporation of India Ltd.

Power Grid Corporation of India Ltd. is expected to experience minimal impact due to its relatively small revenue from Bangladesh, totaling Rs 100 crore in the July-June 2023 period.

NTPC’s Operations in Bangladesh

NTPC recently commissioned a 1320 MW plant in Bangladesh, executed in collaboration with the Bangladesh-India Friendship Power Company Pvt Ltd. (BIFPCL), a joint venture between NTPC Ltd. and the Bangladesh Power Development Board. This project represents a significant capital expenditure of approximately Rs 14,000 crore, assuming a cost of ₹10 crore per MW.

Potential Impact on NTPC’s Receivables

The unrest in Bangladesh could impact NTPC’s power trading arm, particularly in terms of receivables. However, this impact is likely to be minor relative to NTPC’s overall profit pool.

Adani Power’s Exposure to Bangladesh

Adani Power Ltd. has a power purchase agreement with the Bangladesh Power Development Board, initiated in June 2023. Adani Power Jharkhand, a subsidiary of Adani Power, supplies 1496 MW of power from its ultra-supercritical thermal power plant in Godda, Jharkhand. Should the situation in Bangladesh deteriorate, there is a possibility that this agreement could be renegotiated or lead to arbitration.

Medium to Long-Term Outlook

While the current events may cause short-term volatility and challenges for these companies, the medium to long-term outlook remains relatively stable. The immediate impact is expected to be limited, with companies likely to navigate through the near-term challenges.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.