Convoluted auction rules, scuttled competition and friendly bidders lead to the mega solar power deal. The deal is now caught in allegations of corruption, bribery and fraud by the US authorities.
Nitin Sethi & Shreegireesh Jalihal
The Union government designed a solar power auction that discouraged competition and paved the way for Adani Group to secure contracts for assured purchase of its expensive power for thousands of crores of rupees over the next 25 years. The extraordinary auction conditions and a series of exemptions brought in by the Union ministries of power, the renewable energy and its arm the Solar Energy Corporation of India (SECI) in 2019 ensured that Adani Group was the dominant player in the competition with just two others in the ring–Azure Power India Limited and Navayuga Engineering Company Limited.
Even the sparse competition turned out to be embarrassingly empty as Navayuga Engineering bid the highest permitted tariff and lost. The exit came immediately after it signed a deal worth thousands of crore of rupees with Adani Group to sell its port in Andhra Pradesh, negotiations for which were going on while the two competed for the solar contract.
The other competitor, Azure Power, by now has become well known, with the US authorities accusing it of colluding with Adani Group to pay bribes of more than Rs 2,000 crore to state government officials to buy the expensive solar power that they sold to SECI, an intermediary that buys and sells power.
Public debate has been focused on the role of state-level politicians and officials in the alleged bribery scandal. The Reporters’ Collective investigation shows the role of the Union government and SECI in crafting a solar power auction tailormade for the Adani Group and helping bag contracts for 8 GW of power supply where it had originally bid for only 4 GW of projects.
Documents show it was done using the vast policy discretion available with the power ministry, the renewable energy ministry and SECI to auction solar power without adequate regulatory supervision.
Owing to the unique bid conditions, the price at which Adani and Azure bagged the tender would have potentially earned them an assured revenue of Rs 1.5 lakh crore over 25 years. Of this, Adani Group would have earned twice as much as Azure.
This is not the first time solar power tenders have been tailored to fit Adani Group. The Reporters’ Collective has previously exposed how two BJP-ruled state governments put out tenders that magically fit Adani Group’s ground plans and operations. The group had already bagged one tender when The Collective reported on it and was a favourite to win the other. But the second tender was withdrawn a month after we published our investigation.
Such tenders tie down states and governments to purchase the electricity at high prices for 25 years while technological improvement would continue bringing down prices of solar power. The state governments pass these high prices through higher electricity tariffs to consumers.
The Collective sent detailed queries (can be accessed here) to the government, SECI and the private firms. None replied despite repeated reminders. Publicly, Azure announced that it is “aware of the actions announced by the U.S. Department of Justice and U.S. Securities and Exchange Commission against certain former directors and officers of Azure, as well as certain third parties.”
“Azure initially disclosed in January 2023 and in subsequent filings and annual reports, it has cooperated with those agencies and it will continue to do so,” it added. Adani Group dismissed the indictment as “baseless” and said that it “has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance.”
The Unique Tender
Since 2011, SECI has been working as an intermediary, buying power from producers through auctions and selling it to states for a commission. While the power ministry sets broad auction guidelines, the renewable energy ministry and SECI have some freedom in scripting the auction details….
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