The Adani Group faces bribery allegations from the U.S. SEC and Justice Department. At the center of these allegations lies a $200 million bribe linked to a 7,000 MW Power Purchase Agreement (PPA), described as one of the largest solar power deals in India’s history.
Published Nov 26, 2024 | 11:46 AM ⚊ Updated Nov 26, 2024 | 11:46 AM
How Andhra Pradesh officials allegedly took ₹25 lakh each for each MW
What’s the rate of corporate bribery to a government official for supplying electricity when the profits are estimated in billions of dollars? ₹ 25 lakh per megawatt. This is the allegation against Andhra Pradesh government officials according to U.S. Securities and Exchange Commission(SEC).
According to SEC, as part of that agreement—” and consistent with what was communicated to Azure executives during in-person meetings in Ahmedabad (by Adani)—the rate of 25 lakh (or “25L,” with one lakh equal to 100,000 rupees) per megawatt was used to calculate the amounts promised or paid to officials in Andhra Pradesh.”
“That is, 7,000 megawatts multiplied by 25 lakh, which equals 17.5 billion rupees, or 1,750 crore (a multiple of ten billion rupees)—i.e., more than $200 million. As the record indicates, these Andhra Pradesh officials included the Chief Minister (or “CM”),” reads the SEC report.
The Adani Group, India’s largest infrastructure conglomerate, is embroiled in allegations of bribery brought forward by the U.S. Securities and Exchange Commission (SEC) and Justice Department.
The charges claim that the group paid significant bribes to Indian state officials, particularly in Andhra Pradesh, to secure advantageous solar power agreements with the Solar Energy Corporation of India (SECI).
At the center of these allegations lies a $200 million bribe linked to a 7,000 MW Power Purchase Agreement (PPA), described as one of the largest solar power deals in India’s history.
By juxtaposing Adani Group’s public announcements with the SEC indictment and the series of state-level developments, we can observe a striking convergence of timelines that bolsters the allegations.
The biggest bribery case started when the Government of India aimed to expand domestic solar manufacturing in tandem with achieving the 100 GW solar target by 2022. To encourage investment, Solar Energy Corporation of India (SECI) under the Ministry of Renewable Energy launched manufacturing-linked solar tenders in 2018.
The first tender, linking 10 GW solar capacity to 5 GW manufacturing, attracted limited interest due to capped tariffs and dominance of Chinese imports, leading to its cancellation. Subsequent tenders faced similar challenges, with responses improving only after significant adjustments.
In 2019, SECI revised the tender to link 6 GW solar capacity with 2 GW manufacturing, reducing the tariff cap to ₹2.75/unit. This garnered oversubscription by late 2019 after several deadline extensions.
Ultimately, in early 2020, Adani Green Energy and Azure Power emerged as winners, committing to 3 GW manufacturing and 12 GW solar capacity. This marked a significant step, with expected investments exceeding ₹50,000 crore.
However, challenges arose as state discoms, key buyers of solar power, resisted signing agreements at the tender’s rates, which were higher than subsequent market prices (₹ 2.25–2.60/unit). This impasse jeopardised the finalisation of Power Purchase(PPAs) and Sales Agreements(PSAs).
The Andhra Pradesh government’s ambitious 10 GW solar initiative aims to revolutionise agricultural power supply by providing free, sustainable energy to farmers. With annual costs exceeding ₹100 billion for agricultural subsidies and irrigation power, this initiative presents a transformative solution to reduce financial strain while promoting green energy.
Andhra Pradesh, already a significant player in renewable energy with 3.4 GW of operational solar projects and 1.6 GW under development as of 2019, seeks to further cement its leadership in sustainable power generation.
To drive this effort, the state established the Andhra Pradesh Green Energy Corporation Limited (APGECL) under the aegis of APGENCO, ensuring dedicated resources for the project. The initiative gained substantial traction, with the state inviting bids for 6.4 GW of solar projects. The response was overwhelming, attracting 14.9 GW worth of proposals from prominent players like Adani Group, NTPC, and Shirdi Sai Electricals.
However, progress was hampered by legal challenges when Tata Power contested the selection process, leading to the Andhra Pradesh High Court annulling the bid. A larger bench later suspended this ruling, allowing the project to proceed amidst ongoing scrutiny.
While the Andhra Pradesh government was grappling with court cases over renewable energy tenders, SECI approached it with a proposal to finalise a Power Purchase Agreement (PPA) for solar power. However, the state government hesitated, citing potential costs and logistical issues.
According to the U.S. Securities and Exchange Commission (SEC), Gautam Adani personally met Andhra Pradesh Chief Minister YS Jagan Mohan Reddy in August 2021. The SEC investigation report states, “In August 2021, Gautam Adani met personally with the Chief Minister of Andhra Pradesh about the fact that Andhra Pradesh had not entered into a Power Supply Agreement with SECI and the ‘incentives’ needed to cause Andhra Pradesh to do so.”
Although this report was not officially published, shortly after a deal involving Adani and the Gangavaram Port was announced in late August 2021, speculation arose about the meeting’s broader implications.
Just weeks later, on 21 September, the Andhra Pradesh government approved an agreement to procure 9 GW of solar power from SECI, dedicated to supplying the agricultural sector with free power for 30 years. The state cabinet, led by Chief Minister Reddy, approved the proposal.
Opposition leaders raised questions about the timing and outcomes of the meeting between Reddy and Adani. The SEC report further alleges, “At or in connection with that meeting, Gautam Adani paid or promised a bribe 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.” The report also states, “The Andhra Pradesh bribe payment was approximately $200 million. This was also consistent with Adani Green’s internal records.”
In October 2021, the state government announced that it had approved a proposal to procure 7,000 MW of solar power from SECI at a rate of ₹2.49 per unit for 25 years. This decision, aimed at providing nine hours of free power to farmers, was estimated to save the state exchequer ₹4,000 crore annually, according to Information and Public Relations Minister Perni Venkataramaiah.
“Around the same time, Andhra Pradesh agreed in principle to execute a Power Supply Agreement with SECI that would directly benefit Adani Green and Azure. And, within weeks, the Andhra Pradesh government was publicly quoted as saying, ‘In the Cabinet meeting held last month, it was decided to accept SECI’s offer. After deliberation, the State decided to tap 7,000 MW in the first phase.’ In other words, the bribes paid or promised worked,” the SEC report claims.
Subsequently, opposition leaders filed a petition in the High Court challenging the government’s decision to procure electricity under these terms.
The YSR Congress Party (YSRCP) has strongly rejected the allegations of bribery involving the Adani Group, which emerged following a U.S. indictment suggesting that substantial bribes were paid to facilitate solar power contracts in Andhra Pradesh.
The YSRCP clarified that there was no direct agreement between the Andhra Pradesh power distribution companies (DISCOMs) and the Adani Group. The Power Sale Agreement (PSA) signed in December 2021 was solely between the Solar Energy Corporation of India (SECI) and the AP DISCOMs, with no direct involvement of Adani.
The party emphasised that the procurement of 7,000 MW of solar power at a competitive rate of ₹2.49 per kWh was highly advantageous for the state. They projected that this deal would save Andhra Pradesh approximately ₹3,700 crore annually over its 25-year term, providing significant financial relief and contributing to the state’s fiscal health.
According to SEC findings, in July 2021, “Consistent with Adani Green’s internal records, SECI announced its first Power Supply Agreement related to the Manufacturing Linked Projects in July 2021, pursuant to which the Grid Corporation of Odisha agreed to buy 500 MW of power capacity from SECI.”
At the time, news reports indicated that the Odisha Electricity Regulatory Commission (OERC) had approved the procurement of 500 MW of solar power by GRIDCO from the Solar Energy Corporation of India (SECI). The project was being developed under the interstate transmission system (ISTS)-connected solar projects linked to the manufacturing program (Tranche-I). GRIDCO would purchase the power to meet its renewable purchase obligation (RPO) targets.
“According to an Adani Green record, a bribe equal to hundreds of thousands of dollars was paid or promised to government officials in the Indian state of Odisha to cause Odisha to enter into a PSA with SECI for the purchase of 500 MW of power,” reads the SEC report.
However, the Biju Janata Dal (BJD), which was in power in 2021, categorically rejected the bribery allegations. The BJD described the claims as “false and not based on fact,” asserting that there was no evidence to support these accusations against their government officials.
Former Odisha Energy Minister PK Deb clarified that all agreements related to power procurement were strictly between government entities—the Solar Energy Corporation of India (SECI) and Grid Corporation of Odisha (GRIDCO).
He emphasised that there was no involvement of private parties, including the Adani Group, in these agreements. Deb further pointed out that all power agreements required approval from the Odisha Electricity Regulatory Commission (OERC), an autonomous body, distancing the state government from any direct role in these contracts. He reiterated that the agreements were confined to public sector undertakings and did not involve any private entities.
According to SEC, once the bribery scheme gained momentum, it worked quickly and effectively. Between 22 July, 2021, and 1 December, 2021, SECI entered into Power Supply Agreements (PSAs) with DISCOMs in Odisha, Chhattisgarh, Tamil Nadu, and Andhra Pradesh.
In September 2021, Tamil Nadu finalised a 1,000 MW solar deal with SECI. On 17 September, the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) entered into a power supply agreement with SECI to procure 1,000 megawatts of solar power. This purchase aims to help TANGEDCO fulfill its renewable energy procurement targets, as mandated by the state electricity regulatory authority.
The DMK government, led by Chief Minister MK Stalin, has categorically denied any direct dealings with the Adani Group. Tamil Nadu Electricity Minister V Senthil Balaji stated that the Tamil Nadu Electricity Board (TNEB) had not entered into any commercial agreements with Adani since the DMK came to power in 2021.
He emphasised that all agreements were made with the Solar Energy Corporation of India (SECI), a central government agency, and not with Adani directly. Despite denying any wrongdoing, the DMK has called for an investigation into the bribery claims. Minister Balaji challenged the central government, led by the BJP, to initiate a probe if any corrupt practices were involved. He questioned why the BJP was not taking action if they believed there was no connection to Adani.
By August 2021, Chhattisgarh signed a 300 MW solar agreement with SECI. The Chhattisgarh State Power Distribution Company (CSPDCL) signed a power sale agreement with SECI to procure 300 megawatts of solar power.
Former Chief Minister Bhupesh Baghel, who was also the Power Minister at the time of the alleged dealings, strongly refuted any claims that the Congress government had dealings with the Adani Group.
He stated that the allegations were unfounded and emphasised that his administration did not engage in corrupt practices. Baghel has called for a Joint Parliamentary Committee (JPC) probe into the allegations against Adani, supporting Rahul Gandhi’s demand for a thorough investigation into the matter. He expressed that transparency was necessary to clear any doubts regarding the integrity of his government.
By late 2021, Jammu and Kashmir agreed to procure 200 MW of solar power from SECI under a 25-year agreement. The Jammu and Kashmir (J&K) Administrative Council approved the procurement of 200 MW of solar power from SECI to address increasing power demand and promote green energy adoption in the union territory.
The Jammu and Kashmir Congress unit has accused the ruling Bharatiya Janata Party (BJP) of being directly involved in the alleged bribery related to solar power contracts. J&K Congress President Tariq Hameed Karra stated that since Jammu and Kashmir was under President’s rule during the relevant period (2020-2024), any bribery would have occurred under the direct influence of the BJP.
(Edited by Ananya Rao)
