The Adani Group is embroiled in a new controversy, with the Organized Crime and Corruption Reporting Project (OCCRP) alleging that the company misrepresented low-quality coal as a much more expensive cleaner fuel in dealings with an Indian state power utility.
The company faces additional charges, and a report published in the Financial Times on Wednesday said that documents obtained by OCCRP could include an environmental component. Because using low-grade coal for power means burning more fuel, the research suggested that Adani may have unlawfully acquired enormous profits at the price of air quality.
According to the FT report, invoices revealed that in January 2014, Adani purchased an Indonesian shipment of coal with an energy content of 3,500 calories per kg. The Tamil Nadu Generation and Distribution Company (Tangedco) purchased the 6,000-calorie coal, one of the best grades, from this same shipment.
“Adani seems to have more than doubled its money in the process, even after accounting for transport costs,” the report noted. It added that Adani procured the coal in Indonesia from a mining group known for its low-calorie output, at prices reflecting low-grade fuel. This coal was sent to India’s southernmost state for power generation purposes, satisfying a contract that needed pricey, high-quality fuel.
However, the charges were dropped by the Adani Group. The business informed the Financial Times that the coal had gone through “an elaborate quality check process by multiple agencies at multiple points,” dismissing the charge of low-quality supply as “not only baseless and unfair but completely absurd.” The coal’s quality was independently evaluated at the loading and discharge points by customs officials as well as Tangedco specialists. “With the given coal having passed such an exhaustive quality check process by numerous organizations at multiple sites, clearly the allegation of providing low-quality coal
Tangedco was the ultimate purchaser in all 22 shipments, with an average cost per tonne of $86; the FT matched 22 of the 24 voyages with filings from India. According to the report, the pricing is consistent with Argus’s estimations of the local market rates, which ranged from $81 to $89, including freight charges, for high-grade, 6,000-calorie coal.
In response, Adani stated that its Singapore unit, which supplied less than 2% of Tangedco’s coal during the relevant time, could not be held liable for either air pollution or losses suffered by India’s state-owned electricity distribution companies.
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By the close of trading hours on Wednesday, shares of the Adani Group firms had rebounded. Adani Enterprises’ flagship stock closed 0.6% higher at Rs 3,134.75, up from a low of Rs 3,075 in intraday trading.
