Adani's solar deal is in trouble due to Andhra Pradesh’s request for transmission fee waiver
Three sources familiar with the matter have confirmed that the main buyer of Adani Green Energy's solar power, the state of Andhra Pradesh in the south, has requested guarantees regarding the waiver of transmission charges.
Federal law mandates the transmission fee which can increase the cost by up to 40%. Therefore, waiving this would be difficult.
Three sources claim that since April, Adani has been sending letters to Andhra Pradesh urging them to start off-taking power in accordance with a 2021 agreement.
Adani Green, the Solar Energy Corporation of India and Andhra Pradesh signed a deal to produce 7,000 megawatts of power from solar energy. The Solar Energy Corporation of India is a government-appointed intermediary, which ensures that parties adhere to their contractual obligations.
ADANI GREEN ENERGY SAYS THAT IT ENGAGES IN COMMUNICATION ROUTINELY
Sources said that Adani had stated in its most recent letter that it was prepared to provide 4,312 Megawatts of solar energy to the state. The sources asked to remain anonymous because they weren't authorised to publicly speak about the issue. Adani Green Energy's spokesperson said that the company's subsidiaries "routinely engage" in communication, as part of their regular contractual obligations.
In a recent statement, the company's spokesperson stated that it is committed to starting power supply as soon the infrastructure becomes available.
WOULD A WAIVER DEMAND BREAK THE DEAL?
Three sources claim that Andhra Pradesh - a state ruled by an ally of Narendra Modi - told Solar Energy Corporation of India in its initial response of September 2, it would not start off-taking until the intermediary provided a guarantee of a waiver of interstate transmission for the entire 25-year contract.
The letter said that Andhra Pradesh had stated in its letter that the waiver was an incentive to award the contract by 2021, and was available for the project.
Two years later, due to changes in regulations, the waiver was revoked.
Sources said that without the waiver the cost of solar energy to the Indian government will increase to almost 3,49 rupees from 2,49 rupees.
One of them claimed that the deal was in doubt because the solar corporation of the government was not authorized to grant or guarantee a transmission waiver.
Solar Corporation and the State Chief Minister's Office did not respond to emails requesting comments about the letters, whose details had not been previously reported.
US BRIBERY ACCUSATIONS In November of last year, U.S. officials accused Indian billionaire Gautam Adiani, along with his nephew, and other executives, for their involvement in a $265-million bribery plan to secure Indian electricity supply contracts in Andhra Pradesh. The Adani Group rejects the allegations. Adani denied wrongdoing to shareholders in June by telling them that no one from the Adani Group had been charged with violating the U.S. Foreign Corrupt Practices Act. The accusations caused political outcry as the Modi government was accused by the opposition of shielding Adani, his conglomerate and its coal mines, ports, airports and media.
India's opposition parties called for an investigation of the Adani Group in response to the U.S. allegations of bribery, but Indian regulators are yet to act. Reports in December indicated that Andhra Pradesh had approved the solar deal against official advice.
(source: Reuters)
