Gujarat under ₹3,900 cr burden as GUVNL pays Adani Power at higher coal prices

Hinting at an energy scam in Gujarat, the state Congress has demanded an impartial probe into the matter. The allegations indicate that Gujarat Urja Vikas Nigam Ltd (GUVNL) has paid ₹13,802 cr to Adani Power Mundra Limited (APMuL), whereas the amount due was only ₹9,902 cr. This would amount to an unaccounted payment of ₹3,900 crore, which would eventually be paid by the citizens of Gujarat, with highly-priced electricity.

Even though GUVNL had written a letter to Adani Power related to the incident, asking for the price discrepancy, many believe it to be a mere formality for the show. Congress, on the other hand, is buckling up for a protest if the matter is shoved under the rug by the government.

Has Adani Power shown high coal prices?

The allegations state that Adani Power had purchased coal at lower prices than what GUVNL paid for it. Between 2018 and 2023, according to Argus (international coal price assessment body), the amount payable to Adani Power should amount to ₹9,902 cr. However, GUVNL has paid ₹13,802 cr, a whopping ₹3,900 cr surplus.

Gujarat Congress’ state president Shaktisinh Gohil alleged with evidence about the difference between the price paid to Adani Power and the price at which the electricity was bought by GUVNL.

He demanded that Adani Power should submit documents including bills of the coal purchased, and GUVNL verifies the price of coal in the international market by Argus. 

In such a scenario, the questions should be asked…

• Why was the amount paid to Adani Power without the coal purchase bills presented?
• Who is responsible for paying Adani Power for five years without bills?

Gohil taunted that if there was another company, ED-CBI would have raided them, but since Adani is a favoured businessman, the government is not ready to take any formidable action. Not only that, the burden of crores of rupees overpaid to Adani was passed on to Gujarat’s electricity consumers. 

Gohil emphasised that Gujaratis have been forced to buy expensive electricity, and are being exploited by the greedy industrialists.

After Hindenburg row, GUVNL had written a letter

After the Hindenburg report, the Supreme Court formed an inquiry committee, and SEBI was also involved. The opposition demanded the formation of a joint parliamentary committee to investigate the matter.

All of this must have also put pressure on the GUVNL to write to Adani Power Limited. The said letter demanded that the bills of the purchased coal not be presented, despite repeated requests. The GUVNL had to write to Adani Power to pay the additional amount of ₹3,900 cr back.

Lights out on the response to the letter

The said letter was written to Adani Power on May 15, 2023. The letter, now taunted as just a formality for a show, has not been responded to yet. Adani Power has not paid back a single rupee since three months of GUVNL wrote the letter.

The government defends

Government spokesperson minister Rishikesh Patel has said that these allegations made by Gohil are misleading  the people. The letter cited is baseless because the internal correspondence between these two parties is quoted out of context.

Patel said that the power purchase agreement was signed with Adani Power on Feb 6, 2007 (Bid 1), and Feb 2, 2007 (Bid 2). Besides, long-term power purchase agreements have also been signed with Tata Power and Essar Power.

During 2017, due to the increase in coal prices, production was stopped by the above power plants and an increase in energy charges was demanded due to the price of imported coal.

The supplementary agreement with Adani Power, signed on Dec 5, 2018, suggests the payment is made depending on the actual purchase price of coal or the price based on the HBA Index (declared by the government of Indonesia), whichever is lower.

For resolution of outstanding issues like calculation of energy charges, loss of previous period, and considering power requirement, a Settlement Deed took place on Jan 3, 2022, between GUVNL and Adani Power. 

On Mar 30,2022, a submission was made before the Central Energy Regulation Commission) CERC to determine the base rate for the above contract after verification, keeping in view the market price as of Oct 15, 2018, under the contract.

According to Patel, the matter is under consideration before the government and as per the decision of the government, the base rates will be sanctioned, and will be paid back. All payments will be reconciled, effective from Oct 15, 2018.

Payment has been made on an interim basis by considering the coal price submitted by Adani Power and the HBA Index-based price, whichever is lower. 

Patel added that the government will calculate the amount from Oct 15, 2018, on the base rate, and the necessary compensation will be made.

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