The Adani Enterprises purchased coal from an Adani owned company in Indonesia through Adani's offshore shell companies and sold to another Adani company. In the process coal prices were mysteriously inflated by over-invoicing through intermediary shell companies. Common consumers paid the inflated amount after changing the original terms and conditions of the contract.
Gujarat government contracted Adani Power in 2007 for purchase of electricity at rates between Rs. 2.35 and Rs. 2.89. But thanks to Modi government' preferential choices, by December 2022 Gujarat government, using people's money was purchasing power at Rs. 8.83 per unit.
Financial Times (FT) examined 30 shipments of coal imported by Adani Enterprises during 32 months from 2019 to 2021 which were fraudulently over-invoiced to show higher costs of imported coal. The consumer price for electricity produced in thermal power plants is decided after considering input costs for its production. Adani, it is alleged, is defrauding electricity consumers of thousands of crores of money with the inflated bill. In these 32 months the total fraud as apparent in the import/export figures was above 600 crore rupees, may be more. The higher prices of coal were shown in import declarations while the actual prices at which the coal was purchased in Indonesia was much lower as evident from the export records in Indonesian customs.
Incidentally, 74% shares are owned by Adani Enterprise in the Indonesian company which supply coal to Adani Power.
One of these in January 2019 carried coal worth $ 1.9 mn (15.9 crore rupees) from Indonesia which reached India with declared value of $ 4.3 mn (approx. 35.73 crore rupees). In all 30 shipments a total of 3.1 mn (31 Lakh) tonnes of coal was transported, worth $ 142.1 mn (approx. 1180.8 crore rupees) in Indonesia, and the value declared to the customs in India was $ 215 mn (approx. 1786.57 crore rupees). The mysterious increase in cost of the imported coal is of the amount of $ 73 mn - i.e approximately 606.6 crore rupees!
This is only a small glimpse viewed through a 32-month window of what is going on for last many years. Moreover, the FT has exposed what was already known through the media and Finance Ministry’s Directorate of Revenue Intelligence (DRI) which had, in 2016, found the value of Indonesian coal to be artificially inflated by 50-100% and had even issued a notice for an investigation. This probe remains inconclusive till date like other investigations against Adani.
In December 2014 also, DRI had flagged the scam of over valuation of coal imported from Indonesia amounting to Rs. 29,000 crores in three year period. The Adani group companies were in the list of 40 companies listed by DRI in this scam, the investigation into this still remains unresolved.
As per the reports, the imported coal was over-invoiced using offshore shell companies allegedly operated by Adani’s brother Vinod Adani. The owner of one of them (Hi Lingos, Taiwan) is Chang Chung-Ling whose name was exposed by the Hindenburg report. The other two companies, Dubai based Taurus is owned by Mohamed Ali Shaban and Pan Asia Tradelink in Singapore is run by a former employee of Adanis. The over-invoiced amount was eventually charged from the electricity consumers through increased tariffs.
FT’s revelation constitutes only a component in Adani cronyism. In 2018 Gujarat government’s decision to allow Power distribution companies to charge higher tariff for electricity in spite of Supreme Court’s adverse ruling in 2017, to pass through the increased coal prices to the end user, the consumer. The tariff revision request was earlier turned down by Central Energy Regulatory Commission back in 2013, when Modi was not in power in the centre.
M Rajshekhar reported in Scroll.in in 2019 that Adani Power was under debt of Rs. 21,707 crore against an enterprise value of 22,475, almost on the brink of bankruptcy in 2017, turned into a profitable enterprise with its annual profit before tax and deductions to the tune of $ 1.2 billion (nearly 9,700 crore rupees in a year)after the 2018 Gujarat government's decision.
This is not the only scam by Gautam Adani owned companies. The Adani conglomerate's dubious activity was termed as the ‘largest con in corporate history’ by Hindenburg Research report. SEBI is conducting an inquiry into 13 offshore companies allegedly having shares in Adani companies, but could not establish ‘ultimate chain of ownership’ of 13 offshore companies holding shares in Adani stocks. Although Dan McCrum of FT established two of these investors are close associates of Vinod Adani. Earlier, in 2014 SEBI found Adani’s suspicious manipulations of stock market but that could not be probed after Modi came to power in New Delhi that year!