NEW DELHI, May 23
The Adani Group found itself at the centre of yet another controversy, with the Organized Crime and Corruption Reporting Project (OCCRP) alleging that the group passed off low-quality coal as far more expensive cleaner fuel in transactions with an Indian state power utility. A Financial Times report on Wednesday said documents accessed by OCCRP add a potential environmental dimension to other accusations against the conglomerate. “They suggest that Adani may have fraudulently obtained bumper profits at the expense of air quality, since using low-grade coal for power means burning more of the fuel,” the report said. According to the media report, invoices showed that in January 2014, Adani purchased an Indonesian shipment of coal said to contain 3,500 calories per kg. The same shipment was sold to the Tamil Nadu Generation and Distribution company (Tangedco) as 6,000-calorie coal, one of the most valuable grades.
“Adani appears to have more than doubled its money in the process, after transport costs,” the report noted. It added that Adani sourced the coal in Indonesia from a mining group known for its low-calorie output, at prices consistent with low-grade fuel. It delivered the coal to India’s southern-most state for power generation, fulfilling a contract that specified expensive high-quality fuel. The charges were however dismissed by the Adani group. Terming the allegation of supply of low-quality as “not only baseless and unfair but completely absurd”, the group told media that the coal had gone through “an elaborate quality check process by multiple agencies at multiple points”. The quality of the coal was independently tested at the point of loading and discharge, as well as by customs authorities and Tangedco scientists. “With the supplied coal having passed such an elaborate quality check process by multiple agencies at multiple points, clearly the allegation of supply of low-quality coal The FT matched 22 of the 24 voyages with filings from India; in all 22 shipments, Tangedco was the end buyer at an average price of $86 per tonne.
The price is in line with Argus’s estimates of local market prices for high-grade, 6,000-calorie coal, which were between $81 and $89, including freight costs, the report said.
In its reponse, Adani said that by no stretch of imagination can its Singapore unit, with a total supply of less than 2% of the coal burnt by Tangedco in the relevant period, be held responsible, for either air pollution or the losses of India’ state-owned power distribution companies.
Shares of the Adani Group companies had recovered by the end of market hours on Wednesday. The flagship, Adani Enterprises, closed 0.6% higher at Rs 3,134.75 after hitting a low of Rs 3,075 in intra-day trade.
