An Azure managed PostgreSQL database service for app development and deployment.
Hello Guy Light
I have discussed with internal product team, and they confirmed that the error you're getting is related to a known permissions issue introduced with PostgreSQL 16, where role grants with ADMIN OPTION can fail during major version upgrades due to stricter role validation.
This is being addressed in the current rollout train, and scheduled for global deployment in the coming weeks. Your server will receive the fix during its next scheduled maintenance in next few weeks.