Hyderabad: Despite the US Securities and Exchange Commission (SEC) having referred to former Andhra CM Jagan Mohan Reddy in its allegations of bribery and fraud against business tycoon Gautam Adani and others, there’s a strange silence in Andhra Pradesh politics.
The Chandrababu Naidu-led Telugu Desam Party (TDP)—which usually never misses a chance to attack Jagan and his YSR Congress Party (YSRCP)— is yet to launch an offensive over the matter. The YSRCP, meanwhile, maintained radio silence until late in the evening, when it released a rebuttal.
The SEC has initiated civil proceedings against Adani and others, in parallel to the criminal indictment filed by the US Department of Justice (DOJ) that has caused shockwaves in India.
In its complaint filed in a US court, the SEC has alleged that in 2021, Adani met with the Andhra Pradesh chief minister—a post then occupied by Jagan—and that “at or in connection with that meeting, paid or promised a bribe to Andhra Pradesh government officials” to enter into power supply agreements with the Solar Energy Corporation of India (SECI).
Shortly after this, Andhra Pradesh agreed to buy power from SECI, the complaint says. The DOJ indictment also refers to a Rs 1,750-crore bribe being offered to an unspecified Andhra Pradesh government official (‘Foreign Official #1’).
ThePrint approached a senior YSRCP leader who was a minister in Jagan’s cabinet, but he declined to comment on the allegations.
As of Thursday evening, The TDP had not issued any statements on the issue, nor had any leader publicly commented on it.
A senior TDP leader told ThePrint that they would only be able to comment after a nod from their supremo, Naidu. “Yes, we have not reacted so far and the apparent holding back, the caution, is due to the reputed Bharatiya Janata Party (BJP)-Adani connection,” he added.
The TDP, part of the National Democratic Alliance (NDA), is currently running the Andhra Pradesh government in alliance with the BJP and Pawan Kalyan’s Jana Sena Party (JSP), which is also yet to react.
The TDP leader added, however, that all the leaders—CM Naidu, deputy CM Kalyan and minister Nara Lokesh—were too busy with the ongoing assembly session “to ponder over the serious charges”.
Lokesh, the IT and electronics minister, did make some allegations against the previous administration in the House Thursday even as the Adani matter became a hot topic in government corridors and assembly lobbies. He said investors had deserted Andhra Pradesh “as some leaders of the previous government demanded shares in software companies”.
However, ThePrint has found a mention of the SECI deal—with no reference to Adani—in the white paper Naidu released in July on the power sector during Jagan’s tenure. The agreement is among those criticised for causing losses to the state’s utilities and leading to a higher tariff burden on consumers.
The US allegations centre around a tender awarded by SECI to the Adani Group company Adani Green Energy and another firm, Azure Power Global Ltd. These firms were to supply a total of 12 gigawatts of solar power to SECI, which in turn was to find state electricity distribution companies that would purchase this power.
According to the indictment, the high prices stipulated in the deal with the two firms made it hard for SECI to find takers in the states for the solar power—which meant it might not be able to go ahead with the agreement, jeopardising the revenue the companies had anticipated receiving.
This allegedly led Adani and others—including Adani Group executives and the then CEO of Azure Power Global—to conspire to bribe officials of state governments to agree to the deal with SECI.
The Adani Group has issued a statement categorically denying the allegations made by the DOJ and the SEC, calling them “baseless” and saying “all possible legal recourse will be sought”.
In a press statement issued late Thursday, the YSRCP said, “7,000 MW power procurement was approved by AP Electricity Regulatory Commission (APERC) vide its order dated 11-Nov-2021. Following which the Power Sale Agreement (PSA) was signed on 1-Dec-2021 between SECI and AP Discoms. The PSA was following the CERC approval as well. It is necessary to mention that SECI is a Government of India enterprise. There is no direct agreement between AP DISCOMs and any other entities including those belonging to the Adani group. Therefore, the allegations made on the (then) state government, in the light of the indictment are incorrect.”
Jagan’s party also claimed that the project does not entail any burden on account of Inter-State Transmission System (ISTS) charges. “Owing to these reasons, the (SECI) project is extremely favourable with respect to AP’s interests and procurement of power at such a cheap rate would substantially benefit the state with a saving of Rs 3,700 crores per annum. As the agreement is for a period of 25 years, the total benefit to AP on account of this agreement would be immense.”
Also read: Code name for Adani, PPT on bribes, cellphone notes on corrupt officials—Inside US indictment
What DOJ indictment says
The DOJ indictment dated 24 October, a copy of which ThePrint has seen, relates to how Adani Group and associates allegedly “devised a scheme to offer, authorise, make and promise to make bribe payments to Indian government officials in exchange for them causing state electricity distribution companies to enter into PSAs with SECI,” to benefit the Indian Energy Company’s (Adani’s) subsidiaries and the U.S. Issuer.
In furtherance of the alleged bribery scheme, the indictment says that the co-conspirators, through Gautam Adani, Sagar Adani, Vneet S. Jaain and others, had offered and promised to Indian government officials (of different states) Rs 2,029 crore (approximately $265 million).
Of this, “approximately Rs 1,750 crore (approximately $228 million) of the corrupt payments was offered to Foreign Official #1 in exchange for Foreign Official #1 causing Andhra Pradesh’s state electricity distribution companies to agree to purchase seven gigawatts of solar power from SECI under a Manufacturing Linked Project”.
The YSRCP leader quoted above declined to comment on allegations that Jagan was Foreign Official #1.
Following the alleged promise of bribes to Indian government officials, in or about and between July 2021 and February 2022, electricity distribution companies for the states and regions of Odisha, Jammu and Kashmir, Tamil Nadu, Chhattisgarh and Andhra Pradesh entered into power supply agreements with SECI.
The indictment says that Andhra Pradesh’s electricity distribution companies entered into a PSA with SECI on or about 1 December, 2021, pursuant to which the state agreed to purchase approximately seven gigawatts of solar power—“by far the largest amount of any Indian state or region.”
With executed PSAs under the Manufacturing Linked Project, SECI could enter into corresponding power purchase agreements (PPAs) to purchase solar power from the Indian Energy Company’s subsidiaries and the U.S. Issuer.
In or about and between October 2021 and February 2022, the U.S. Issuer and the Indian Energy Company, through subsidiaries, executed PPAs with SECI, the indictment says.
Also read: How Gautam Adani’s business partners tried to place entire ‘bribery blame’ on him, nephew Sagar
Naidu’s white paper on SECI deal
The white paper released by Naidu in July to publicise Jagan’s alleged misdeeds and misappropriations says that Andhra Pradesh’s power utilities had incurred a total loss of Rs 1.29 lakh crore over the past five years.
The section “Increased Debt of AP Power Utilities,” says that the financial position of the utilities deteriorated despite several electricity tariff hikes—imposing an additional burden on consumers—due to key issues like inefficient governance.
“On 1st December 2021, Government of Andhra Pradesh, APDISCOMs and SECI entered into a tripartite agreement for procurement of solar power for a capacity of 7,000 MW from SECI at a tariff of Rs. 2.49/Unit,” the paper says.
The date (1 December 2021) and the quantity of power (7000 megawatts or 7 gigawatts) corresponds with that in the Adani indictment. Naidu’s white paper, however, makes no mention of Adani Group.
“This solar capacity shall be connected to the inter-state network and is scheduled to be commissioned in phases with 3,000 MW in September 2024, another 3,000 MW in September 2025 and the balance 1,000 MW in September 2026. Considering the lowest tariff of Rs. 1.99/Unit discovered at the time of signing of tripartite agreement, the additional tariff burden on consumers is around Rs 850 crore per year,” Naidu said at that time with the aid of the white paper.
“Though solar projects are exempted from payment of General Network Access (GNA) charges, the state (AP) shall be liable to pay General Network Access (GNA) charges for other than solar hours. The additional burden due to GNA charges is expected to be around Rs. 3,000–3,500 crore per year. Thus, the total additional burden due to procurement of solar power from SECI is around Rs 3,850–4,350 crore per year. Net present value of additional burden due to this for 25 years is around Rs 62,000 crore,” the white paper further says.
Speaking to ThePrint on the condition of anonymity, a top civil servant in Andhra Pradesh said, “Yes, it is the same deal. The solar power supply should have commenced from September 2024. We have not received a single electron under this agreement till now.”
Also read: How an indictment works in the US legal system & what comes next for Gautam Adani, others