Congress accuses Gujarat govt of paying Rs 3,900 crore extra to Adani Power, govt says ‘misleading’

Citing a letter written by state-run Gujarat Urja Vikas Nigam Limited (GUVNL) to Adani Power Mundra Limited on May 15, 2023, state Congress president Shaktisinh Gohil said, “Under the power purchase agreement with Adani Power, the government was to pay energy charges for the electricity generated from coal imported from Indonesia.

The money would be paid after the company produced the bills for purchase of coal through a competitive bidding process. Secondly, the money would be paid as per the rates of coal on the Argus index. From 2018 to 2023, Adani Power Mundra Limited did not produce bills or produce documents, but the company was paid Rs 3,900 crore more as energy charges.”

Gohil claimed that following the explosive Hindenburg report against Adani in January, the matter reaching the Supreme Court and SEBI deciding to probe issues surrounding Adani Group, prompted GUVNL officials to write the letter to save themselves. “The letter was written because of the inquiry (against the Adani Group),” he said.

Reading out portions from the GUVNL letter, Gohil said, “GUVNL has been repeatedly asking for the documents and bills with regard to the coal purchased from Indonesia.” He added that the letter mentions that the coal was procured from at a “premium price” from “selected spot suppliers”.

“From October 15, 2018 to March 31, 2023, GUVNL paid Rs 13,802 crore as energy charges to the company. But if coal rates as per Argus index is taken into consideration, then only Rs 9,902 crore should have been paid for the said period. There has been excess payment of Rs 3,900 crore during this five-year period. In the letter, GUVNL also requests the company to refund the excess money paid… The letter does not mention anything about the interest that would be charged from the company for the excess payment,” Gohil said.

He alleged that the Rs 3,900-crore paid in excess as energy charges to Adani Group is being collected from consumers in the state. “Without support of Prime Minister or chief minister, no IAS officer has the ability to keep paying a company in contravention to the power purchase agreement. I want to know under whose orders the payment was made. The manner in which the money has been given falls under the definition of money laundering. It is a clear cut case of money laundering. So, will ED, CBI or SEBI probe? Also, how much has been recovered from the company in last three months?” Gohil asked.

The government, meanwhile, said that it had signed two power purchase agreements (PPAs) with Adani Power Mundra in February 2007 and a supplemental PPA was signed with Adani Power Mundra on December 5, 2018, as per which “energy charge payment is to be made at lower of actual rate” at which coal is procured and the government of Indonesia’s index-notified coal price. The supplemental PPAs allow for “fuel cost to pass through to the projects,” as per the government.

In a statement, Patel said: “To amicably resolve the pending issues related to energy charges, past period losses and taking into consideration the power requirement of the state, GUVNL and Adani Power entered into settlement deed dated 3.1.2022 and GUVNL filed a petition before Central Electricity Regulatory Commission with a request to determine and recommend the base rate as on 15.10.2018 after prudent check and taking into consideration the relevant market prices at that time.”

The CERC, in an order dated June 13, 2022, made its recommendations to the government on the various pricing components. The government stated that it is yet to decide and approve on the base rate recommendations as made by CERC.

The government added that following an “unprecedented increase in prices of imported coal in international market” since after September 2021, and to ensure uninterrupted supply to an increased demand, it was decided that till the time it takes a decision on the base rate, GUVNL, on an interim basis, will consider the energy charge methodology as per Standardized Power Purchase Agreement (SPPA) of December 5, 2018 for the purpose of payment.

“For the purpose of interim payment, the rate of coal purchase as submitted by Adani Power and the rate worked out as per the HBA index derived price, whichever is lower, has been considered for the purpose of energy charge payment on interim basis and this payment would be subject to adjustment as per the computation pursuant to approval of Base Rate as on 15.10.2018 by government,” the statement clarified. “…the allegation… that payment has been made to Adani Power during the last five years without any documents is misguiding since the energy charge payment from 15.10.2018 is not final and would be reconciled and adjusted upon approval of base rate of government. The allegations made by the Opposition party referring to the letter are baseless because the same is a commercial communication between the parties to the contract and has been quoted out of context,” the statement added.