Adani Group Suspected of Charging Too Much for Coal

Adani Group: The Adani Group is under scrutiny for allegedly overcharging for coal, raising concerns about fair pricing and potential financial impacts. Adani Group faces allegations of excessive coal pricing, sparking concerns over fairness and financial implications.

Key Points:

• Adani Group accused of overcharging for coal imports
• Allegations supported by invoices, banking documents, and leaked data
• Investigation by India’s Directorate of Revenue Intelligence (DRI) stymied by legal challenges
• Potential financial and environmental impacts on ordinary Indians

Background

On January 9, 2014, the MV Kalliopi L docked at Ennore port in Chennai, carrying 69,925 metric tons of coal from Indonesia. Despite its straightforward journey, the coal’s paperwork traveled through the British Virgin Islands and Singapore, with its price tripling from $28 to $91.91 per metric ton. Additionally, the coal’s quality was mysteriously upgraded from low-grade to high-quality, sought-after coal.

Findings

Documents obtained by OCCRP and shared with the Financial Times reveal that between January and October 2014, at least 24 coal shipments to Tamil Nadu’s power company followed a similar pattern:

• Originally priced as low-quality coal, these shipments were sold by Adani Group for three times the initial cost.
• Evidence includes invoices, banking documents, DRI investigation details, and leaked data from an Indonesian coal supplier.

Implications

These findings suggest a pattern of over-invoicing by Adani Group, which is politically influential and closely tied to Prime Minister Narendra Modi. The overcharging not only raises electricity costs but also increases pollution, a significant health hazard in India.

Legal Hurdles

The DRI’s investigation, which began nearly a decade ago, was stalled in 2019 after Adani won a court case preventing the DRI from obtaining crucial shipment details from abroad. The case is currently awaiting a decision in India’s Supreme Court.

Political Reactions

Opposition politicians have called for a new investigation following reports that Adani overpaid $5 billion to middlemen for coal between 2021-2023.

Environmental and Economic Impact

Burning low-quality coal produces more pollution, exacerbating air quality issues in India. A study in the Lancet linked air pollution to over 1.6 million deaths in India in 2019. Additionally, inflated coal prices burden consumers with higher energy costs.

Local Advocacy

Arappor Iyakkam, a Tamil Nadu NGO, estimates that TANGEDCO overpaid Rs 6,000 crore ($720 million) for coal between 2012-2016, with nearly half the tenders going to Adani. The NGO lodged a complaint against TANGEDCO in 2018.

Adani’s Response

An Adani spokesperson denied the allegations, asserting that the coal supplied met quality standards and was tested at multiple points. They also rejected any responsibility for India’s air pollution or the financial losses of state power companies.

Conclusion

The allegations against Adani Group highlight significant issues in India’s coal import processes, with potential legal, economic, and environmental ramifications. The ongoing investigation and court case will be crucial in determining the outcome of these serious charges.