The Adani Group has been thrust into the spotlight once again, facing serious allegations from the Organized Crime and Corruption Reporting Project (OCCRP). The allegations suggest that the conglomerate misrepresented low-quality coal as high-grade, cleaner fuel in transactions with the Tamil Nadu Generation and Distribution Corporation (Tangedco), a state power utility in India. This controversy adds an environmental dimension to the ongoing scrutiny of Adani’s business practices.
Environmental Impact and Financial Gains
A report by the Financial Times, drawing on documents accessed by OCCRP, indicates that Adani may have achieved significant profits at the expense of environmental standards. The report suggests that using low-grade coal necessitates burning more fuel, potentially worsening air quality. Specifically, the report highlights a January 2014 transaction where Adani purchased Indonesian coal with a calorific value of 3,500 calories per kg. This coal was then sold to Tangedco as 6,000-calorie coal, one of the higher-grade types.
Discrepancies in Coal Quality
According to the Financial Times, Adani sourced the coal from an Indonesian mining group known for producing low-calorie coal at prices aligned with low-grade fuel. However, the coal was sold to Tangedco as high-quality fuel, doubling Adani’s revenue after accounting for transport costs. The report also notes that Adani’s coal shipments matched market prices for high-grade coal, which ranged between $81 and $89 per tonne, including freight costs.
Adani Group’s Response
The Adani Group has vehemently denied the allegations, describing them as “baseless and unfair.” The company emphasized that the coal supplied underwent rigorous quality checks by multiple agencies, including customs authorities and Tangedco scientists, at various stages of the supply chain. “With the supplied coal having passed such an elaborate quality check process by multiple agencies at multiple points, clearly the allegation of supply of low-quality coal is absurd,” an Adani spokesperson stated.
Market Reactions
Despite the controversy, shares of Adani Group companies showed resilience. By the end of trading on Wednesday, Adani Enterprises had recovered from intra-day lows, closing 0.6% higher at Rs 3,134.75. This recovery suggests investor confidence remained steady despite the serious nature of the allegations.
Broader Implications
Adani’s response also highlighted that its Singapore unit, which supplied less than 2% of the coal used by Tangedco during the relevant period, should not be held accountable for broader issues such as air pollution or the financial losses of India’s state-owned power distribution companies. This defense underscores the complexity and scale of the operations involved.
The allegations against the Adani Group, if proven true, could have significant implications for the company and its reputation. As the investigation unfolds, the focus will remain on how these allegations are addressed and the potential impact on environmental standards and corporate accountability in India.
