Adani Group's Bribery Case Origins In Manipulated Solar Auction By Modi Government: Report

A recent report by The Reporters’ Collective uncovers shocking details about the Adani bribery case and how the central agencies allegedly played an instrumental role in it via a solar power auction. The report reveals that through tweaking auction rules and limiting competition, the Solar Energy Corporation of India (SECI) ensured that Adani Group got its hands on the solar power projects, which enable the firm to earn over Rs 1.5 lakh crores in revenue over 25 years.

Gautam Adani, his nephew Sagar Adani, and other associates were accused by US authorities of alleged corruption involving $265 million in bribes to secure solar power contracts across Indian states.

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How Was The Controversial Auction Planned?

Since 2011, the SECI operated as an intermediary by purchasing power from producers through auctions and selling it to states for a commission. Along with SECI, the power ministry and the renewable energy ministry also create the tenders. However, both the SECI and the renewable energy ministry have some sort of freedom in setting the auction details (the power ministry simply sets the broader guidelines).

The Reporters’ Collective highlighted how in 2018, the SECI set up manufacturing-linked auctions in the country where it bought massive amounts of solar power from companies that also produce solar power components. Additional criteria included the bidder having a net worth of Rs 110 crores or more and operating at an expansive scale by SECI. The catch is that there are only a few firms in India that fit the demands. Adani Group was one such firm.

“SECI offered to buy a whopping six gigawatts (GW) of solar power from companies that were willing to also set up solar equipment manufacturing for up to 2 GW of power in total. The bidders had to commit to setting up manufacturing plants that produce a minimum of solar power components of 500 MW capacity annually over a period of 30 months. They could buy more time,” stated The Collective’s report.

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Essentially, SECI was offering to cross-subsidise a firm’s cost of setting up a solar component plant by purchasing electricity from it at a massive scale for the next 25 years.

In May 2018, Vikram Solar Limited, a solar power component manufacturer, wrote a critique published on their website wherein it spoke of a similar tender SECI had issued during the time. It stated that the tender suggested that the winner of the auction need not produce solar power using components from their plant or any other Indian manufacturer, going against the ‘Made In India’ campaign.

The report further highlighted that the tender conditions were tweaked several times till 2019.

Vneet Jain, an Adani Group executive who is among those accused of fraud and bribery by the US court, told an investor that there were “salient features” of the tender that weren’t present in “any other” tender, as per company records.

The Dubious Auction – Navayuga And Adani Group

Three companies came to bid: Adani Group, the Azure Group, and the Navayuga Group. Azure recently made headlines after the US authorities accused it of colluding with Adani Group to pay bribes to state government officials to buy the expensive solar power that they sold to SECI. While Navayuga offered to sell solar power at Rs 2.93 per unit of electricity (kWh). Adani bid for selling power at Rs 2.92 per unit, 15 minutes after Azure bid at the same price. Navayuga lost the auction.

There’s a catch.

Around the same time, August 2019, Navayuga was in talks with Adani Group to sell Krishnapatnam Port (private port) in Andhra Pradesh. This was also the time when Navayuga had donated Rs 45 crore to BJP via electoral bonds.

In November 2019, Navayuga bid as a competitor to the Adani Group in the SECI auction. A month after Adani Group and Azure won the solar bid, the port deal was sealed. In January 2020, the deal was formally announced with Adani Group receiving 75 percent equity in the port from Navayuga for Rs 3,375 crore.

Notably, government regulations require authorities to investigate bids for possible collusion by bidders. Somehow, both Navayuga and Adani Group managed to escape such scrutiny, reported The Collective. The months-long talks for the port deal between the two firms were public knowledge even when they were bidding against each other for the solar auction, but neither were reviewed by the SECI.

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Adani Group Wins The Auction

Gautam Adani’s firm got a commitment from the government to buy 8 GW instead of the 4 GW it had originally bid for. Azure got a 4 GW deal from the Union government firm after bidding for only 2 GW originally.

The Council on Energy Environment and Water, one of India’s most prominent energy and climate think tanks, observed how the winning bidders had received a great deal at the cost of the consumer and estimated that both Adani and Azure were going to make an “unfair Rs 22,000 crore revenue” based on the usually prevalent solar power rates.

The Collective estimated that the two companies stood to make a revenue of over Rs 1.5 lakh crore over 25 years with the winning bid price of Rs 2.92 per unit.

And because the SECI failed to find a buyer among the state governments for the massive amounts of electricity it had agreed to buy from Adani and Azure at the high price, the private companies allegedly paid bribes worth $265 million (Rs 2,000 crores) to state government officials to persuade them into signing the purchase agreements with SECI.

However, after a year and a half, the firms reduced the tariff on their own, making it Rs 2.42/kWh. This would lead them to make at least Rs 53,000 crore in revenue over the next 25 years, reported The Collective.

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When The Opposition Raised Voice

Then an opposition MLA and now Andhra Pradesh’s Finance Minister, Payyavula Keshav claimed that the tender process violated government guidelines. He alleged that the ministry of power’s guidelines were only to purchase solar power and not to bundle solar components manufacturing with it as doing so would restrict competition, leading to higher tariffs for consumers. Keshav also highlighted other favourable terms of the auctions made so the deal would appeal to bidders.

Responding to the same, SECI defended itself and claimed that it followed the Union government’s guidelines and that the two firms had voluntarily reduced the asking price after the auctions.