Adani Under Fire For “Magic” Coal and EBITDA

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    Stockholm (NordSIP) – It appears that Indian conglomerate Adani is back in the news, and not for good reasons. Having previously attracted tremendous criticism for the environmental and social impact of its exploitation of coal mines in Australia, the Indian  infrastructure and energy company faced short-selling based on accusations of stock manipulation and fraud by investment research firm Hindenburg Research at the start of 2023.

    While Adani appears to have weather that storm, new accusations have now surfaced that continue to paint the Indian company as a perpetrator of greenwashing.

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    Adani’s “Magic ” Indonesian Coal

    According to a report by the Organized Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists, between January and October 2014, 25 coal shipments from Indonesia to the southern Indian city of Chennai in Tamil Nadu started their journey as low-quality before arriving India as “clean, high-quality version sought by power companies.” In at least one case, the price of the shipment is said to have tripled.

    “The evidence comes from multiple sources, including invoices and banking documents from several jurisdictions, details of investigations by India’s Directorate of Revenue Intelligence (DRI), leaked documents from a key Indonesian coal supplier for Adani, and a trove of documents obtained from the Indian state-owned power company TANGEDCO (Tamil Nadu Generation and Distribution Corporation),” the OCCRP report says.

    The OCCRP’s claims come after the Financial Times identified 30 shipments of coal from Indonesia to India by an Adani company between 2019 and 2021, where import prices upon arrival in India were significantly higher than the export prices declared upon leaving Indonesia. The same report also argued that Adani Group appeared to have paid over US$5 billion to middlemen for coal imported far in excess of market prices between 2021-2023, in a scheme that may have involved a Taiwanese company whose owner was “named by the FT as a substantial hidden shareholder in Adani companies.”

    Adani Denies Accusations

    When asked about OCCRP’s findings, Adani denied the accusations, describing the allegations as “false and baseless.”

    “The suggestion that Adani Global Pte Ltd supplied to TANGEDCO inferior coal, as compared to the quality standards laid down in the tender and PO [purchase order], is incorrect. While it is difficult for us to comment on individual cases due to the sheer volume of data and the elapsed time, not to add the contractual and legal obligations, it is important to note that the coal supplied, irrespective of the declaration by the supplier, is tested for quality at the receiving plant, ” an Adani spokesperson said to OCCRP.

    “By no stretch of imagination can Adani Global Pte Ltd, 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 [power distribution companies],” the Adani spokesperson added.

    Snowcap Research Accusations and Politics

    As if this was not enough, on May 30th, a week after the publication of the OCCRP claims, Snowcap Research, another activits investor, claimed that Adani Green energy, the largest owner of renewable power in India, had “obfuscated investors” by inflating its Run-rate EBITDA and had overstated through “accounting gimmicks” its ability to achieve unlevered returns on its renewable projects by 5% to 6%.

    These controversies take place in the broader context of the ongoing Indian elections, which Prime Minister’s Nahendra Modi’s Hindu nationalist BJP party is poised to win. Adani is seen as having close ties to Modi and as profiting and acting as one of the main agents of the country’s development agenda.

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