To pull or not to pull the plug: Adani bribery row puts TDP in a bind

TDP-led Andhra Pradesh government has a difficult choice to make vis a vis the power deal at the heart of a raging controversy over US bribery allegations against Gautam Adani

Balineni Srinivasa Reddy, a relatively low-profile figure in national politics, is suddenly at the centre of a nationwide controversy.

A five-time member of the Legislative Assembly (MLA) from Ongole in Andhra Pradesh and relative of former chief ministers the late Y S Rajasekhara Reddy and Y S Jagan Mohan Reddy, Srinivasa Reddy’s political moves have long been watched closely within state circles.  In September 2024, he severed his ties with Jagan and the YSR Congress Party (YSRCP), defecting to Pawan Kalyan’s Janasena Party.

  Recently, Srinivasa Reddy — who was energy minister in the previous YSRCP-led government in Andhra Pradesh — revealed a dramatic behind-the-scenes account of a now controversial agreement signed between the state and Solar Energy Corporation of India (SECI) in 2021.

  He claimed that he had been abruptly awakened at 1 am and pressured into signing the agreement — now at the heart of heart of corruption allegations — but he refused, citing a lack of clarity and discussion. “Sensing something wrong, I refused to sign the agreement as there was no clarity or proper discussion on the matter,” said Srinivasa Reddy, adding the Cabinet later approved the deal. 

  His comments came days after the US Securities and Exchange Commission’s (SEC's) $250 million bribery allegations involving the Adani group’s founder and chairman, Gautam Adani, and seven others in connection with projects under Adani Green Energy Limited (AGEL).

  Referring to the August 2021 meeting, the complaint by the US SEC noted that a bribe was paid or promised to Andhra Pradesh government officials, “to cause the relevant Andhra Pradesh government entities to enter into Power Supply Agreements with SECI for the purchase of 7,000 Mw of power capacity.”

  Srinivasa Reddy was not available for comment.

  Jagan Mohan Reddy has refuted the US SEC allegations, saying that the state government had no direct links with Adani, and the deal was between SECI and power distribution companies.

  Last week, the Adani group denied charges related to bribery or foreign corruption. “Media reports stating that Gautam Adani, Sagar Adani, and Vneet Jaain have been charged with violations of the US Foreign Corrupt Practices Act (FCPA) are incorrect,”  it stressed.

  The controversy following Srinivasa Reddy’s comments has thrown Andhra Pradesh’s current political leadership into a delicate position. Chief Minister N Chandrababu Naidu’s Telugu Desam Party (TDP) government is grappling with the fallout, despite the fact that the alleged corruption took place under Jagan’s administration.

  According to a Reuters report quoting Finance Minister Payyavula Keshav,  state government officials are reviewing files to explore the possibility of cancelling the power supply contract linked to the Adani group. Keshav had initially raised concerns about the deal’s supposedly hefty price tag — Rs 2.49 per unit — back in November 2021, but experts argue that cancelling it is unlikely given the need to ensure long-term power security for the state. Andhra Pradesh’s electricity demand is projected to rise sharply over the next decade.

  “Naidu may not cancel the deal, as this may lead to a huge power crisis in the state,” said Rama Krishna Sangem, a veteran journalist and political analyst. “Finding an alternative source of electricity could prove expensive for the state.”

The electricity demand for Andhra Pradesh is increasing at a CAGR (compound annual growth rate) of 7.96 per cent from 2023-24 to 2031-32, according to the Central Electricity Authority. It is expected to grow by 75 per cent — from 78,134 million units (mu) in 2023-24 to 137,022 mu by 2031-32. Projections from APTRANSCO also indicate that electricity demand may increase at a CAGR of 6.27 per cent from 2023-24 to 2029-30.

  Andhra Pradesh faced a power crisis when the Jagan government cancelled the power purchase agreements signed during the previous Naidu regime in 2019.

  For the state, the stakes are high — not just in terms of power security, but also politically and economically. “Adani has already committed a lot of investments in Andhra Pradesh,” Sangem added. “Any action against the company could affect the prospects of those investments. Also, Adani is believed to have close ties with the central government.” Naidu’s Telugu Desam Party is a constituent of the ruling NDA at the Centre.

  In 2022, the Adani group agreed to invest around Rs 60,000 crore in Andhra Pradesh, including a 10,000 Mw solar power project and a 3,700 Mw pumped hydro solar project. During a global investors’ meet last year, the group committed to building two new cement manufacturing plants with a total capacity of 10 million tonnes per annum in Kadappa and Nadikudi, as well as a 400-megawatt data center in Visakhapatnam.

  These investments were in addition to the Rs 20,000 crore already invested in the state. Given these large-scale projects, experts warn that the cancellation of the power deal could have far-reaching consequences, potentially damaging investor confidence and sending the wrong signals to both domestic and foreign investors.

Some experts even view the SEC’s allegations as an act of aggression against the Indian company by the outgoing Joe Biden administration in the US, and expect relief after Donald Trump becomes president. 

Naidu’s handling of the Adani controversy will also depend on how the central government decides to proceed with SECI, which awards power supply contracts to companies. For now, both Naidu and the TDP are in a “wait-and-watch” mode, unsure of the next steps as the controversy continues to unfold.