Semafor Signals
India’s Adani Group implicated in coal scam as scrutiny on founder’s political ties grows
Insights from Financial Times, Bloomberg, Reuters, and Al Jazeera
The News
India’s Adani Group has allegedly sold low-grade coal as a more expensive and less polluting form of the fuel, according to documents provided by the Organised Crime and Corruption Reporting Project to the Financial Times.
In some cases, Adani appears to have more than doubled its sales profits by selling imported low-grade coal as a far higher grade to Indian state energy companies, the report showed. Coal accounts for more than 70% of India’s electricity generation, despite air pollution being a leading cause of death.
The alleged scam adds scrutiny toward the relationship between India’s prime minister Narendra Modi and Gautam Adani, the chair of the Adani Group, with some opposition politicians calling for an investigation into Adani after the first phase of India’s ongoing general elections ends on June 1.
SIGNALS
India’s utilities depend on flawed third-party tests to grade coal
India has committed to net zero carbon emissions by 2070, but it relies on coal — and particularly, the dirtiest kinds of the fuel — as the main source of energy. Some 80% of India’s thermal coal imports in the first half of 2023 came from Indonesia, South Africa, and Russia, which are known to export low-grade, high emission coal. Third-party agencies can test coal for its quality, but it’s expensive and there is “scope for abuse,” the Financial Times reported, and the coal companies’ power means utilities have little choice but to accept, one professor of public policy at IIT Delhi said.
Adani Group faces multiple allegations of corruption
The Adani Group has an outsized role in India’s energy infrastructure, with international scrutiny to match. In March, the United States Department of Justice was reportedly investigating Adani entities for bribery — a move “laced with geopolitical implications” as the US considers India a strategic ally. But Tim Buckley, director of the Clean Energy Finance think tank, told Bloomberg that Adani’s position is assured, regardless: “The organization works very, very effectively, unlike a lot of Indian competitors, and they get things done.” It’s unclear whether the new allegations will move the needle given that position.
Modi critics cite the ties to Adani as elections continue
When Modi led the state of Gujarat, his infrastructure projects “provided a platform for growth for companies in the state such as Adani Enterprises Ltd.,” Bloomberg reported, and Adani tripled its wealth assets when Modi became a top political pick in 2014. These close ties have resurfaced during election campaign season, with Modi’s opponents pointing out the connection between the prime minister and the country’s billionaires. But they may not remain so: Modi has recently alleged that the opposition received illegal funding from Gautam Adani, in a move that signals a “change in tack” perhaps to address low voter turnout, Reuters reported.
