New Delhi: Solar Energy Corporation of India (SECI), Chhattisgarh-based CSPDCL, Tamil Nadu’s TANGEDCO, Odisha’s GRIDCO Limited, Jammu and Kashmir’s JKPCL and other state-run power distribution companies in Andhra Pradesh are among eight PSUs that have been named in an indictment order unsealed by the United States (US) Department of Justice (DOJ) on November 20. A five-count criminal indictment was unsealed in a federal court in Brooklyn in the US, charging Adani Group Chairman Gautam S Adani, his nephew Sagar R Adani and Managing Director and CEO of Adani Green Energy Limited Vneet S Jaain, among others, with conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from US investors and global financial institutions on the basis of false and misleading statements.
While SECI is the only Central PSU, under the Ministry of New and Renewable Energy (MNRE), to be named in the order, other PSUs are state-run entities, including, Chhattisgarh State Power Distribution Company Limited (CSPDCL), Tamil Nadu Generation and Distribution Corporation (TANGEDCO) Limited, GRIDCO Limited, Jammu Kashmir Power Corporation Limited, Andhra Pradesh Central Power Distribution Corporation Limited, Andhra Pradesh Eastern Power Distribution Company Limited and Andhra Pradesh Southern Power Distribution Company Limited.
In June 2020, Adani Green Energy announced that it has bagged “the largest-of-its-type ever in the world” contract from SECI under which it will develop 8 GW of solar projects along with a commitment to establish 2 GW of additional solar cell and module manufacturing capacity. This is the project that has been referred to as a “Manufacturing Linked Project” in the indictment order issued by the US DOJ. Under the terms and agreements of the contract, SECI was supposed to purchase 12 GW of power from Adani and Azure Power under a power purchase agreement (PPA) and sell it further to DISCOMs under a power sale agreement (PSA). The size and scope of the project was among one of the largest in the world and it more than doubled Adani Group’s renewable energy (RE) portfolio, said the order. “For example, the US Issuer anticipated that, over 20 years, the Manufacturing Linked Project would generate more than USD 2 billion in profits after tax,” it added.
However, due to high power tariff contemplated in the Letters of Award (LOAs), it was difficult for SECI to find state-run buyers of energy under the Manufacturing Linked Project at the rate mentioned in the LOA, said the indictment order. “After the award of the Manufacturing Linked Project, SECI unsuccessfully sought out Indian state and union governments to purchase the 12 GW of solar power pursuant to PSAs. Without PSAs to sell the energy to a state buyer, SECI would not enter into corresponding PPAs to purchase power from the Indian energy company’s subsidiaries or the US Issuer,” it added.
“SECI’s inability to find purchasers jeopardised the lucrative LOAs, and corresponding revenue, that the Indian Energy Company’s subsidiary and the US Issuer anticipated receiving from the Manufacturing Linked Project,” said the US DOJ.
“As a result, in or about 2020, the defendants Gautam S Adani, Sagar R Adani, Vneet S Jaain, Ranjit Gupta and Co-Conspirator #2, among others, devised a scheme to offer, authorise, make and promise to make bribe payments to Indian government officials in exchange for the government officials causing state electricity distribution companies to enter into PSAs with SECI, which would allow the Indian Energy Company’s subsidiaries and the US Issuer to secure PPAs with SECI (the “Bribery Scheme”),” it alleged.
Describing the “Bribery Scheme,” the US DOJ has claimed that the co-conspirators undertook extensive efforts to corruptly persuade government officials to cause state electricity distribution companies to execute PSAs and buy expensive power from Adani’s projects and frequently discussed those efforts amongst themselves, including through the use of an electronic messaging application. It said that Gautam Adani, Sagar Adani, Vneet S Jaain and others, had offered and promised to Indian government officials approximately Rs 2,029 crore (approximately USD 265 million) in bribes in exchange for Indian government officials causing the state electricity distribution companies to execute PSAs.
“Approximately 1,750 crore rupees of the corrupt payments was offered to Foreign Official #1 in exchange for Foreign Official #1 causing Andhra Pradesh’s state electricity distribution companies to agree to purchase seven gigawatts of solar power from SECI under the Manufacturing Linked Project,” said the order.
“Following the promise of bribes to Indian government officials, in or about and between July 2021 and February 2022, electricity distribution companies for the states and regions of Odisha, Jammu and Kashmir, Tamil Nadu, Chhattisgarh and Andhra Pradesh entered into PSAs with SECI under the Manufacturing Linked Project. Andhra Pradesh’s electricity distribution companies entered into a PSA with SECI on or about December 1, 2021, pursuant to which the state agreed to purchase approximately seven gigawatts of solar power — by far the largest amount of any Indian state or region,” said the order.
Adani agreed to supply SECI with 650 MW of solar power for Chhattisgarh, Tamil Nadu, Odisha and Jammu and Kashmir, and approximately 2.3 GW of solar power for Andhra Pradesh. . “Following the execution of the Andhra Pradesh-linked PPAs by the Indian Energy Company’s subsidiaries, the Indian Energy Company issued a press release quoting Gautam S Adani, who touted the signing of the world’s largest PPA with SECI,” said the order.
When asked to comment on the matter, SECI Managing Director RP Gupta told PSU Watch, “There is no allegation against us. It is only against state governments... There is no document with us other than the order, on the basis of which we could comment on the issue. I have heard of it only from the media. Further, I am not sure whether any norms have been violated and if anybody has been named in the order.” PSU Watch tried to reach out to other PSUs for comments but could not reach them by the time this story was published.
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