No smoke without fire; Adani, government colluded in corruption?

The Adani group bribery scandal originated in a dubious solar power auction that the Modi government scripted which is now caught in allegations of corruption, bribery and fraud by the United States Securities and Exchange Commission, a recent investigation by Reporters’ Collective, a consortium of investigative journalists has claimed. The extraordinary auction conditions and a series of exemptions brought in by the Union ministries of power, the renewable energy and its arm the Solar Energy Corporation of India (SECI) in 2019 ensured that Adani Group was the dominant player in the competition with just two others in the ring- Azure Power India Limited and Navayuga Engineering Company Limited, the collective said.

Navayuga Engineering bid the highest permitted tariff and lost, immediately after it signed a deal worth thousands of crore of rupees with Adani Group to sell its port in Andhra Pradesh, negotiations for which were going on while the two competed for the solar contract. The Collective investigation showcased the role of the Union government and solar energy corporation of India (SECI) in crafting a solar power auction tailor made for the Adani Group and helping bag contracts for 8 GW of power supply where it had originally bid for only 4 GW of projects. Documents which the collective procured show it was done using the vast policy discretion available with the power ministry, the renewable energy ministry and SECI to auction solar power without adequate regulatory supervision. Such tenders tie down states and governments to purchase the electricity at high prices for 25 years while technological improvement would continue bringing down prices of solar power. The state governments pass these high prices through higher electricity tariffs to consumers. It all began in 2018 when SECI decided to buy massive amounts of solar power from those companies that also produce solar power components, and called it manufacturing-linked auctions.

The bidders had to commit to set up manufacturing plants that produce a minimum of solar power components of 500 MW capacities annually over a period of 30 months. Three bids came in for the SECI auction from Adani Group, the Azure group and the Navayuga Group. Navayuga offered to sell solar power at Rs 2.93 per unit of electricity (kWh). Adani bid for selling power at Rs 2.92 per unit, 15 minutes after Azure bid at the same price. In August 2019 news on the talks for the port came out, and incidentally it was also the year Navayuga had donated Rs 45 crore to BJP throu g h e l e c t o r a l b o n d s . According to the charges framed by US prosecutors, the difficulty in landing a buyer is what prompted executives of Adani Group to allegedly pay over Rs 2,000 crore in bribes to secure power purchase deals. “This was an ineffective measure as the competitive disadvantage of domestic PV (solar panel) manufacturers remains unaddressed. Moreover, the tariff discovered at the tender burden cash-strapped discoms, and it’s challenging for SECI to find discoms to sign the power sale agreement for the electricity generated” an associate at the Council on Energy Environment and Water, one of India’s most prominent energy and climate think tanks said in July 2020.

Indeed, SECI reportedly could not find a buyer among the state governments for the massive amounts of electricity it had agreed to purchase from Adani and Azure at the high price. As it scrambled for buyers, according to charges framed by the US Department of Justice, the two private firms allegedly paid bribes worth over Rs 2,000 crore to state government officials to lure them into signing power purchase agreements with SECI, and even lowered their tariffs.