Recent reports have revealed that the controversial Adani Energy deal that led to Gautam Adani’s indictment occurred despite the opposition of several experts. Experts say Adani’s procurement deal received regulatory approval from India’s state government too fast even though experts had told the regulator that the deal wasn’t good value.
After reviewing 19 state government documents and interviewing over two dozen federal and state employees as well as independent legal and energy professionals about the controversial Adani deal, Reuters paints a picture of political officials who ignored expert advice from energy and finance officials to approve the Adani energy deal in barely three months.
Prosecutors in the U.S. have indicted Adani CEO Gautam Adani and several other executives for bribing government officials to secure energy deals in several Indian states and at least one territory. The prosecutors claim Adani and seven executives offered $228 million to an Andhra Pradesh state official to make Adani Green the de-facto renewable energy supplier for the electricity distribution firms that supply energy to the Solar Energy Corporation of India.
The Solar Energy Corporation of India (SECI), a federal agency in charge of building India’s solar sector, reached out to Andhra Pradesh state on October 15, 2021, and asked if the southeastern state wanted to sign the largest renewable energy contract in the industry.
Even though Andhra Pradesh said in 2019 that it didn’t need solar energy in the short term and would focus on alternative renewables that could generate energy 24\7, records show that the state’s government gave preliminary approval for the deal on October 15, 2021, just a day after (SECI) made its approach.
The Andhra Pradesh Electricity Regulatory Commission (APERC) approved the deal by November 11th and state authorities signed a procurement deal with SECI on December 1st. The regulator okayed the deal just 57 days after SECI approached the state government, an unusually tight timeline for a 7,000-megawatt procurement deal.
With an annual revenue of $490 million per year, most of the green energy deal’s profits would go to Adani Green, the clean energy wing of Adani Group. Additional costs would make the deal more expensive than it was on paper and leave taxpayers in Andhra Pradesh saddled with the cost of thousands of unneeded megawatts of energy. Some experts even say the deal could put undue strain on the state’s budget.
Billionaire and Adani CEO Gautam Adani said the bribery and fraud charges levied against him by U.S. officials are ‘baseless’ while Adani Group didn’t respond to questions about the unnaturally fast approval process or the alleged corruption driving the deal. SECI, on the other hand, told Reuters that it was up to states and their energy regulators to decide their energy needs but didn’t respond to other questions.
It is important that the push to transition to green energy doesn’t get mired in distractions like corruption allegations. Such controversies could, in one way or the other, cast doubts in the minds of some investors looking to leverage the earning potential of firms like First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) that are positioning themselves to benefit from the energy transition push.
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