 "Andhra to review power deal linked to Adani Group amid US SEC charges")
The state of Andhra Pradesh is considering putting its power purchase agreement with the Adani Group on hold due to the recent indictment of Adani Group founder Gautam Adani in a United States bribery case, a report by Reuters citing state government sources on Tuesday. The southern state is also expected to ask the union government and the Solar Energy Corporation of India (Seci) to investigate the bribery allegations that have come to light.
Andhra-Adani solar power deal
The power purchase agreement (PPA) under scrutiny involves the Andhra Pradesh government’s procurement of 7,000 megawatts (MW) of solar power through the Seci. The arrangement was intended to supply nine hours of free daytime electricity to farmers, with the Andhra Pradesh Electricity Regulatory Commission (APERC) approving the procurement plan in November 2021, under the tenure of former Chief Minister Y S Jagan Mohan Reddy’s administration.
This agreement was part of a broader initiative to enhance the state’s renewable energy capacity and provide cost-effective power to the agricultural sector.
US SEC charges against of Gautam Adani
Gautam Adani, along with his nephew Sagar Adani and several others, has been indicted by US Securities and Exchange Commission (SEC) for their alleged involvement in a $265 million bribery scheme aimed at influencing Indian officials in relation to power supply deals for energy projects in India. The charges stem from transactions dating back to 2021 when Adani’s companies raised funds from US-based investors.
The group has strongly denied the charges, calling them “baseless”, and pledged to pursue all available legal avenues to clear its name.
Impact on Adani Group’s business
Shares of companies under the conglomerate were also affected by the charges, with Adani Enterprises and Adani Ports, facing sharp declines on the Indian stock exchanges, with several dipping as much as 20-30 per cent over the week.
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Despite these allegations, GQG Partners, a Florida-based investment firm, expressed confidence in the Adani Group’s long-term fundamentals, stating that the charges were limited to Adani Green Energy Ltd and did not implicate the wider conglomerate.
However, the fallout has been felt in other parts of the business world. TotalEnergies, a French energy giant, announced it would pause further investments in Adani Group companies, citing the ongoing corruption investigations. Additionally, Kenya has canceled $2.5 billion worth of infrastructure projects tied to the Adani Group, and a US development agency is evaluating the implications of the bribery charges on a Sri Lanka port project previously financed by the agency.
In response to these developments, the Adani Group has denied the allegations regarding the cancellation of its deals with Kenya, stating that it had not entered into any agreements with the Kenyan airport and had no new financial commitments with TotalEnergies.
Moody downgrades credit rating
Earlier today, rating agency Moody’s changed the outlook on seven Adani Group companies from ‘stable’ to ‘negative’, following the US indictment of Gautam Adani and key management members. The downgrade reflects concerns over the potential legal and reputational risks posed by the bribery allegations and the charges filed by the US SEC in a civil case.