Red flags in Andhra after SECI says Azure capacity given to Adani in public interest

The Central Electricity Regulatory Commission, the apex regulatory body for the power sector, had asked SECI on October 28 this year if the transfer of power capacity from Azure Power to Adani Green Energy was allowed under the tender floated in 2019.

In response, SECI told the regulator that the transfer was made in larger “public interest” as the Andhra Pradesh government was “keen on (capacity) being made available”.

The transferred capacity was part of the 12,000 MW solar tender floated by SECI in 2019, which is now under scrutiny for bribery as alleged by the Securities and Exchange Commission, the capital market regulator in the US.

SEC had alleged that the capacity transfer was in lieu of bribery payments made by the Adanis on Azure’s behalf as part of the $265 million bribery scheme involving state government officials.

The SEC had alleged that Azure’s share of the bribe to be paid or paid to state government officials was one-third of $265 million.

The Adani Group has denied these allegations as baseless. SECI and CERC did not respond to queries mailed by The Indian Express.

In its filings to the US prosecutors, SEC said, “The end result of these maneuvers—Azure’s withdrawal from and forfeiture of a substantial portion of the Manufacturing Linked Projects and Adani Green’s takeover of nearly all of that portion of the projects—was that Azure transferred significant value to Adani Green, Gautam Adani, and Sagar Adani in partial satisfaction of Azure’s share of the bribes that Gautam Adani and Sagar Adani had paid or promised.”

The Solar Energy Corporation of India had in separate submissions to the power regulator on December 6 and December 11, said that the transfer of Azure’s capacity to Adani Green was “not prohibited” and that “there is nothing wrong with adopting the process if it is in public interest,” according to documents accessed by The Indian Express.

“These are commercial decisions which SECI is entitled to do within the approval already taken so long there is no arbitrariness, unfairness and there is public interest in doing so,” SECI said. In turn, SECI awarded the surrendered capacity to Adani Green as “it became necessary to consider the salvaging of the capacity”.

“This was particularly when APDISCOMs and Government of Andhra Pradesh were keen on such 2,333 MW being made available and Adani was willing to undertake the additional capacity on the same tariff terms and conditions except commissioning schedule of the projects,” it said in filings.

While there is no specific provision for transfer of capacities prior to commissioning in the tender document, SECI submitted to CERC that “it has acted within the power of the person initiating the competitive bidding process” to carry out the transfer. “It is a settled principle of law that if a thing is not prohibited, there is nothing wrong with adopting the process if it is in public interest,” it said.

In November, US prosecutors had indicted the Adani Group’s chairman Gautam Adani, his nephew Sagar Adani, and six others for offering Rs 2,029 crore (US $265 million) in bribes to officials in Andhra Pradesh state government.

The bribes were allegedly made after SECI was unable to sign power sale agreements (PSAs) with state discoms.

After the tender was awarded, SECI had to sign PSAs with state DISCOMs, without which it could not sign power purchase agreements (PPAs) with Adani Green and Azure. US prosecutors have alleged that “SECI’s inability to find purchasers jeopardized the lucrative LOAs (letter of awards), and corresponding revenue” that was anticipated by the two companies. According to SEC’s filing, the PPAs were executed by SECI “only after Adani Green’s senior executives, Gautam Adani and Sagar Adani, undertook a massive bribery scheme to incentivize Indian state government officials to enter into contracts with SECI to buy energy at above market rates”.

SEC noted that Gautam Adani personally met with the Chief Minister of Andhra Pradesh in August 2021, and “at or in connection with that meeting, Gautam Adani paid or promised a bribe to Andhra Pradesh government officials to cause the relevant Andhra Pradesh government entities to enter into Power Supply Agreements with SECI for the purchase of 7,000 MW of power capacity”.