Reports on the Adani group’s projects worldwide show massive illegalities, ecological and environmental destruction, human rights violation, tax evasion, money laundering and corruption. An ongoing coal based thermal power project in India which will supply its entire power to Bangladesh and import coal from Adani’s Carmichael mines in Australia, points to crony capitalism, exploitation, corruption and violation of laws.
Who are Adani?
The Gujarat based Adani conglomerate is India’s biggest port operator and the largest private producer of electricity both thermal and renewable. The group also has substantial interests in coal mining, civil construction, logistics, international trade, education, real estate, edible oils and food storage.
According to Forbes magazine, the Ahmadabad-based Gautam Adani had a net worth of US$8 billion (AUD$10 billion) as on 30 August 2017.
The rise of Adani and ties with Modi
Gautam Adani, after a successful stint as a diamond trader in Mumbai, moved to Gujarat’s capital Ahmadabad in 1981 to help start a cousin’s firm to trade in poly-vinyl chloride (PVC).
He set up a commodities trading venture in 1988 under Adani Exports, and by the mid-1990s, Adani’s business successes starting attracting attention.
The Modi-Adani friendship can be traced back to 2002, the year Gujarat witnessed gruesome communal riots between Hindus and Muslims. After the Confederation of Indian Industry (CII), criticized Modi the then chief minister, a group of local businessmen led by Adani, established the Resurgent Group of Gujarat (RGG) and threatened to leave the CII, supporting Modi.
Adani pledged a huge financial support for the first Vibrant Gujarat summit (that took place in September-October 2003).
During chief minister Modi, large tracts of land were given to Adani group at throwaway prices to set up India’s biggest private port at Mundra on the west coast in violation of environmental norms.
The area has one of India’s biggest special economic zones (SEZs) which are supported by the country’s largest private railway network. The land in the area was re-sold and/or leased by the Adani group to various other companies, including public sector undertakings like the Indian Oil Corporation (IOC), the Oil and Natural Gas Corporation (ONGC) at high rates.
The group was also exempt from payment of all stamp duties for the thousands of acres of land it acquired for the SEZ.
During his election campaigning, the then Prime Ministerial candidate for the Bharatiya Janata Party (BJP), Narendra Modi flew across India in Gautam Adani’s private jet. The BJP has subsequently stated that it rented out the private flights from Adani.
Genesis of the Godda thermal power project
A coal-based 1600 MW (1.6 GW) thermal power project is being built in one of India’s most coal rich states, with indigenous people comprising the majority population in the proposed project site.
Adani’s Godda plant however, depends entirely on imported coal from a mine the project proponent owns some 10,000 km away in Australia.
The Australian Carmichael mine has just about started construction work, just like the 1600 MW Godda thermal power plant , both having faced major delays due to numerous legal and financial hurdles.
Most interestingly, the entire power produced at the Godda thermal power plant is to be exported to Bangladesh.
So why does Godda need a highly polluting and environmentally damaging thermal power plant? What does the state of Jharkhand or its indigenous people whose fertile multi-crop land has been illegally and forcibly acquired, gain out of this deal?
Also, how does Bangladesh gain by importing this highly expensive power from Adani’s Godda plant?
How is the project a” public purpose venture with zero displacement” of indigenous people?
And, why is Australia going all out to promote Adani’s mega coal mine and the Abbot Point port at the Galilee valley risking the Great Barrier Reef?
The Godda project
The Bharatiya Janata Party (BJP) state government of Jharkhand state had signed a memorandum of understanding (MoU) with the Adani Group for the 1.6 GW coal-based thermal power project, in 2016.
This was followed by forceful acquisition of land, severe violation of processes set by the Land Acquisition Rehabilitation & Resettlement (LARR)Act 2013, bulldozing standing crops of farmers, lying to villagers about the potential benefits of selling their land to Adani, and intimidating the affected people with police brutalities , and lawsuits in the last two years.
According to the social impact assessment (SIA) report of the company, 1,364 acres, spread across 10 villages of two blocks of Godda, was to be acquired for the thermal power plant, which is supposed to produce 1,600 MW of electricity.
The Jharkhand government, as well as Adani claim that the project is a “public-purpose project with ‘zero’ displacement.
They add that the project will lead to generation of employment and economic development”.
Even though Adani Power Limited is required to provide at least 25% of total power to Jharkhand as per the states power policy, Adani which promised to provide it from” some other source”, does not clearly mention the source.
In a blatant display of crony capitalism, the Jharkhand state BJP government changed its energy policy in October 2016. Instead, of getting its 25% share of power it agreed to buy power from Adani at a higher rate costing the exchequer more than Rs 7,000 crore in the next 25 years.
Icing on Adani’s cake
To add insult to injury, the 1,600 MW megawatt project was approved by the Modi government, the status of a Special Economic Zone (SEZ) just before India’s 2018 national elections. It is India’s first power SEZ, geared to fully export electricity.
This was only possible due to a change made by the Indian government to existing regulations, and it makes Adani exempt from several levies, including on rail access and imported coal and equipment.
Significantly, with the declaration of the project as SEZ, the state was no longer entitled to the electricity generated from the plant.
The project has also been approved for a roughly $US700 million loan from the Power Finance Company (PFC), an Indian state-owned lender that funds power stations; and for another $US700 million loan from the Rural Electrification Corporation (REC), a state-owned company designed to help electrify Indian villages.
Huge contributions from Indian taxpayers (Bangladeshi’s and Australians too) are being blatantly granted to Adani group to produce electricity from imported coal (Carmichael mines Australia), in India’s most coal rich state, and sell the same at exorbitant rates to Bangladesh!
Adani’s proposed 1.6GW power station in Godda requires importing an estimated 5 to 6 million tonnes of coal from Adani’s Carmichael mine in Australia each year. This arrangement is despite of India’s own policy of phasing out imported coal.
The ambitious plot
On July 2015, a joint declaration was signed by Bangladesh and India during Indian Prime Minister Narendra Modi’s visit to Bangladesh.
In August 2016, Adani Power signed an MoU with Bangladesh Power Development Board (BPDB) to set up a 1600 (2×800) MW thermal power plant on build-own-operate (BOO) basis in Godda district of Jharkhand, India. Adani will export the entire power generated from the power project to Bangladesh.
Environmental abuse
Adani’s Godda coal plant will draw 36 billion litres of water every year from the Ganges River, putting endangered species such as the Gangetic dolphin at risk, as well as the fish population.
Adani have already started using huge amounts of water from the surrounding villages in Godda with local farmers complaining that their wells are running dry and crops are failing due to ground water depletion.
The project received environmental approval in 2017, but there had been little progress on construction until Chinese company Sepco Three began construction in September 2019.
Adani wants the power station to be operational from 2022, roughly coinciding with its planned export of coal from the Carmichael mine in Australia.
Adani has also received an environmental clearance (EC) to build a 100km pipeline to extract water from the Ganges River at Sahibgunj, to use in the Godda power station. This approval is being challenged at the National Green Tribunal (NGT), New Delhi.
Blatant violation and manipulation of existing land laws
The 1949 Santal Parganas Tenancy (SPT) Act was intended to prevent Adivasi(indigenous) dispossession by placing several restrictions on the transfer of land from farmers in the erstwhile Santal Parganas district, now divided into six districts, including Godda.
There is no provision in the SPT Act for the government to transfer land to a company. The SPT Act gives powers over the village’s common property (gair mazruwa) lands, such as grazing grounds to village heads, not the government.
In blatant violation, such common lands too have been acquired by the administration and given to the Adani group on 30-year leases, while titles of farmers’ land are being transferred to the company.
According to rules for the land acquisition rehabilitation and resettlement act( LARR Act) 2013, reiterated in the Jharkhand government’s own LARR rules issued in 2015, the landowner’s declaration giving or denying consent must be counter-signed by a district official.
The rules also state that a copy of this declaration, with the attached terms and conditions, must be handed to the affected landowner. None of the farmers who lost their land to Adani have these declarations. A group of sixteen resolute villagers have challenged the illegal land grabbing at the Jharkhand High Court.
Adani’s gain, Bangladesh’s pain:
Analysts in the field of energy and finance have said that the Adani’s complicated plan to ship Australian coal 10,000 km to an Indian power plant can be made possible only by passing on the costs to Bangladeshi energy consumers.
The Bangladeshi electricity grid is already suffering from over-capacity, with 44% of its power capacity lying idle, and over a billion dollars currently being paid to energy companies each year for power that is not used.
Tim Buckley, Director of Energy Finance Studies of the US-based think tank Institute for Energy Economics and Financial Analysis (IEEFA), said, “Adani power is the largest producer of renewable energy in India, which is now the cheapest among all other power generating sources of the country. If Bangladesh really needs electricity from Adani, they should ask for cheap renewable energy instead of high cost thermal power from Godda. “
Bangladeshi researcher Sajjad Hossain Tuhin said, “Bangladesh will be purchasing electricity from Adani Godda Power plant at the rate of 7.53 BDT per unit, whereas solar energy price in India is only 2.74 BDT”.
As a coincidence, recently, Bangladesh’s minister of power, energy and mineral resources, Nasrul Hamid, surprised energy watchers recently when he said the country is planning to ‘review’ all but three of 29 planned coal plants.
However, on paper the Bangladesh government remains cautious about renewable expansion, with their 2016 forecast signalling a negligible role for renewable energy till 2041.
India’s unclear stand on climate change:
At the Paris climate conference, Modi told the world that India would enlarge its forests to absorb 2.5 billion tonnes of carbon dioxide. Returning home, he directed the environment ministry (MOEF&CC) to loosen its regulations. India did not cap its emission, but ramped up renewable, while coal based thermal power still sustains its base load.
Significantly, coal mines were exempted from public hearings, irrigation projects proceeded without the proper clearances and the right of tribal village councils to oppose an industrial project was weakened.
Australian controversy
The Adani website states “work is well underway on the Carmichael Mine site. As of early 2020, more than $1 billion in contracts had been signed for the construction of the Carmichael Mine and Rail project. We are generating up to 1,500 direct jobs at the peak of construction and supporting thousands of indirect jobs”.
The project has been mired in controversies, with disputes over its claimed economic benefits, financial viability and environmental damage it will cause to the Great Barrier Reef and the ground water dependent ecosystem of the Galilee basin.
Two bleaching events in the last two years have already killed as much 50% of the Great Barrier Reef. In addition, Adani group’s project involves dredging of 1.1 million cubic metres of sea-bed near the Great Barrier Reef which raises risks of damage to the reef.
Legal challenges
In response to a legal challenge by the Australian Conservation Foundation, the federal government conceded in the federal court that it failed to properly consider public submissions in passing judgment on Adani’s North Galilee Water Scheme. In 2016 the Federal Court of Australia had dismissed a challenge by Australian Conservation Foundation.
Earlier, Adani Group had pleaded guilty to providing false or misleading information to the environmental regulatory authority in Queensland State in Australia. The local court fined the Adani Group AUD 20,000 (Rs 9.63 lakh).
Another challenge to the $21 billion (approximately Rs 1.4 lakh crore) mining project by the Wangan and Jagalingou indigenous community was dismissed.
Even Adani’s Mining Chief Executive Jeyakumar Janakaraj had faced scrutiny for failing to disclose that a company he ran in Africa was guilty of serious environmental breaches, despite being asked to do so in a letter from the Federal Environment Department.
Financial viability questionable
Adani’s Thermal Coal Mine in Queensland will never stand on its own two feet, Tim Buckley of IEEFA has stated in a report. Adani Mining Pty Ltd has current liabilities of more than $1.8bn versus current assets of less than $30m as of 31 March 2019.
In IEEFA’s view, the Adani Carmichael thermal coal mine project would not open nor survive without billions of dollars in subsidies.
In 2015, South Korean conglomerate LG announced they would not proceed with a contract to buy coal from the mine. Samsung Securities’ recent decision to pull support for the project is just the latest in several contracts that have been withdrawn.
Insurance company Allianz “no longer offers single-site/stand-alone insurance coverage related to the construction and/or operation of lignite/coal-fired power plants and mines where lignite/coal is extracted”, the firm announced in April 2020.
Global banks including Goldman Sachs, HSBC, JPMorgan Chase and more have ruled out financing coal projects with specific references to Adani Mining’s activities.
Investigations in India on corruption, money laundering and tax evasion
The Supreme Court stayed a Bombay high court order of October 2019, which had quashed the Letters Rogatory (LRs) sent by the Directorate of Revenue Intelligence (DRI) to several countries in connection with a case of alleged overvaluation of Indonesian coal imports involving some Adani Group companies.
A company in the Adani group had moved a Singapore court in an attempt to block the release of information via the Letter Rogatory route, the Indian Express reported in August 2017.
On 22 August 2017, the adjudicating authority in the Directorate of Revenue Intelligence (DRI) absolved two Adani group companies, Adani Power Maharashtra Limited (APML) and Adani Power Rajasthan Limited (APRL), of all charges laid out in a show cause notice issued by the DRI in May 2017.
Within a year of registering a case against unnamed Adani group officials and public sector bank officials relating to the equipment over-invoicing cases, the CBI had closed its investigation into the Adani group companies, on what were arguably rather flimsy grounds of jurisdiction.
It was after these events that a PIL was filed in the Delhi High Court by Common Cause and the Centre for Public Interest Litigation , two New Delhi based non-government organizations (NGOs) seeking the formation of a special investigation team( SIT) to look into all the allegations of over-invoicing in the power sector, both of coal and of equipment imports.
In another instance, the CBI has registered a case of cheating and corruption against Adani Enterprises and a former chairman and an ex-managing director of multi-state cooperative NCCF for alleged irregularities in selecting a company for a tender to ferry coal from ports to power stations in Andhra Pradesh.
Soumik Dutta is an independent investigative journalist based in Bangalore and Kolkata, India. He is an honours graduate in Economics from the Scottish Church College, University of Calcutta(Kolkata). He works and researches on the energy sector, energy transition, environmental violations, rights of indigenous people, human rights violations, and land conflicts arising out of developmental projects.He is associated with the Hundred Reporters Washington DC as a freelance correspondent.
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