DRI probe may affect Rs 800-crore relief to Adani

The DRI alleged at least 40 power generating firms imported Indonesian coal directly from ports in that country to India while import invoices were routed through one or more intermediaries based in Singapore, Hong Kong, Dubai and British Virgin Islands to artificially inflate its value.

Written by Khushboo Narayan | Mumbai | Updated: November 30, 2017 8:10 am
Adani, Adani power case, Gautam Adani While the agency is yet to issue show-cause notices to Adani Group firms, it alleged that money was being “siphoned” outside the country (Express File Photo/Anil Sharma)

The top electricity regulator has said that findings of the Directorate of Revenue Intelligence (DRI) in the probe into alleged over-invoicing of Indonesian coal imports by Adani Power Ltd will affect the compensation it received from discoms in Haryana.

The Central Electricity Regulatory Commission (CERC) had allowed an interim compensation of about Rs 800 crore to Adani Power from Uttar Haryana Bijli Vitran Nigam Ltd and Dakshin Haryana Bijli Vitran Nigam Ltd for supply of power since 2013 “by arranging coal from alternative sources” — importing from Indonesia.

The compensation was allowed after Adani Power sought increased tariff revenue citing “financial difficulties” in arranging “working capital”.

However, the electricity regulator put two conditions. One, it may revisit the compensation if DRI submits its findings to the CERC and, two, the compensation will be subject to adjustment on final determination of relief on the compensatory tariff issue.

“We are of the view that any finding by DRI against Adani Power would have impact on the coal imported by Adani in lieu of the shortfall in the domestic coal for which interim relief is granted in this order. Accordingly, if any such case is brought to the notice of the Commission by DRI, it will open to the Commission to revisit the relief…” said the CERC order passed by Gireesh B Pradhan, chairperson, and its three members on September 28.

The DRI is probing at least 40 companies including five firms of Adani Group including Adani Power for alleged overvaluation of coal imports from Indonesia pegged at Rs 29,000 crore from 2010 on.

While the agency is yet to issue show-cause notices to Adani Group firms, it alleged that money was being “siphoned” outside the country and the electricity-generating firms were availing of “higher tariff compensation based on artificially inflated cost of the imported coal”.

In March 2016, the DRI issued a general alert to its field formations across India, outlining this modus operandi of over-invoicing of coal imports from Indonesia.

In an email response to a detailed query sent by The Indian Express, Hasmukh Adhia, former Revenue Secretary and the current Finance Secretary said, the DRI will share the details of its probe with the CERC and the state electricity regulatory commission once the adjudication process is finalised.

“In case of the show-cause notice issued by DRI in the cases of over-valuation of imports by Adani Group, the DRI Adjudicating Authority had dropped the proceedings on August 22, 2017. However, as per the procedure for review of Orders of the Adjudication Authority, a Committee comprising of 2 Chief Commissioners of Customs has reviewed this Order of Adjudicating Authority and directed the Commissioner of Customs vide their Order dated November 15, 2017 to file an appeal in the tribunal, which would be done before December 14, 2017. Once the Adjudicating process reaches finality, then only DRI will be in a position to inform CERC and SERC,” said Adhia.

An email and phone calls to the official spokesperson of Adani Group did not elicit any response.

In April, the Supreme Court had set aside an earlier CERC ruling that allowed power producers to charge compensatory tariff from consumers. It also directed the CERC to consider the matter afresh keeping in mind the government’s revised coal allotment and power tariff guidelines.

The CERC had in 2013 awarded compensatory power tariff to Tata Power Co Ltd and Adani Power, because of a rise in price of coal imported from Indonesia. The companies had cited a change in Indonesian rules in 2010 as a force majeure event that raised the cost of coal imported from that country to fuel their electricity plants in Mundra.

The compensatory tariff allowed to both Tata Power and Adani Power was Rs 2,300 crore and Rs 3,600 crore respectively till March 2016.

The Supreme Court, however, ruled that “an unexpected rise in the price of coal will not absolve the generating companies from performing their part of the contract for the very good reason that when they submitted their bids, this was a risk they knowingly took” .

The DRI alleged at least 40 power generating firms imported Indonesian coal directly from ports in that country to India while import invoices were routed through one or more intermediaries based in Singapore, Hong Kong, Dubai and British Virgin Islands to artificially inflate its value.

The DRI alleged that in certain cases, the import value of Indonesian coal was artificially inflated by about 50 to 100 per cent by changing test reports which measure the calorific value of coal.

The CERC order assumes significance as, typically, the power tariff is regulated based on the costing data provided by the power generator. According to regulations, the tariff factors in capacity charges and energy charges. The capacity charges are fixed annually based on various factors. The energy charges are the cost of primary and secondary fuel used to generate power.

Artificial inflation of value of the imported coal increases the landed cost of coal, which is a primary fuel in coal-fired thermal power plants. The higher tariff dispensed by the regulator to the power generator enhances the cost of purchase of the power distributor which, in turn, factors this artificially enhanced cost in its billing to consumers.

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  1. Dhanasekaran Balasubramanian
    Nov 30, 2017 at 9:12 pm
    it is only an eye wash to divert the attention of the gujarat voters.
    1. Patnam Umamaheshwaran
      Nov 30, 2017 at 11:58 am
      Ache Din chalegaye kya
      1. Maheshinder Singh Dhindsa
        Nov 30, 2017 at 10:05 am
        What business has Adhia to say let the adjudication process be over. Political patronage is seeping out of the email.
        1. Jaganathan Vijayakumar
          Nov 30, 2017 at 8:49 am
          We have to appreciate BJP which is not supporting Adani even though it supported Modi to become PM as it was cheating Government of India since 2010 knowing fully Congress will loose 2014 Election despite Congress took heavy money from Adani and others. This is like Malliya who was helped by Congress after taking good amount for giving maximum loan who is also facing tough case in judiciary.
          1. R
            Nov 30, 2017 at 10:42 am
            You read about the 5500 crore black money case of Adani. You'll be able appreciate Modiji much more than the current levels -)
            1. M
              Nov 30, 2017 at 10:12 pm
              Your Italian import used to buy economy class tickets ( Kingfisher Airline ) and have them upgraded at Malliya's cost
            2. N
              Nov 30, 2017 at 10:54 am
              Wah! now you are saying congress took mone from Adani, as though BJP did not take anything. When infact it is the other way round. By this logic, you should appreciate that Coal Scan and Telecom scam came out when UPA was in power, so you should appreciate the congress, that it did not use its power to gag the case!
              1. S
                Nov 30, 2017 at 11:05 am
                very true, atleast they initiated the cases and removed the accused from power and most of them were in jail too, and BJP has released all of them and some fled to UK also, and only point raised by BJP in all state elections is look at UPA corruption, arey how many days you will cry on their rule, you do something to reduce taxes and inflation so that people can live and save
                1. M
                  Nov 30, 2017 at 10:14 pm
                  Don't forget one of the UPA Minister said 2G was ZERO loss. Another one --a crook of sorts -- had said ZERO loss in Coalgate --- because the coal was still in the ground when the scam was exposed
                2. R
                  Nov 30, 2017 at 1:52 pm
                  Adani has taken Rs8500 crore out of India for electrical equipment purchase. The invoice was raised from Dubai so the money came to Duabi, where the equipment was manufactured partly in China and Japan. Total value of the equipment to the manufactuer was regouly Rs 3000 crore. Balance money was transferred to Mauritius company of Adani's brother and later the same money landed in PAYTM. Remember the Modi picture on PAYTM adverti t just before the Demonetisation? MOre serious case is that Adani and people like him has taken the Rs out of India in a legal channel approved by BJP Govt. and the ordinary people made to pay more for this corruption of BJP Govt and Adani. This is only one such transaction, how many more that we do not know? BJP is more corrupt and they are corrupt on an organisational way than the corruption of individuals in Congress. A corrupt party on Govt is more dangerous to the nation than a corrupt politician.
                  1. M
                    Nov 30, 2017 at 10:16 pm
                    Try again -- your MAA AUR BETA party takes the cake for corruption
                3. D
                  Nov 30, 2017 at 7:39 am
                  Adanis are beyond law.they are innocent even if proven guilty.
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