In the midst of the Adani Group crisis, after US short seller Hindenburg Research accused the conglomerate of “running the biggest scam in corporate history”, have surged several concerns about the group’s investments in other South Asian nations.
Under India’s “neighborhood first” policy, the government of Prime Minister Narendra Modi had promised to offer support to all neighboring countries in the areas of trade, energy, transport and connectivity, science and technology, defense, rivers and maritime affairs.
Gautam Adani – once the third richest person in the world – seems to have taken the lead, or has been given the opportunityto fulfill the promise of Prime Minister Modi to the neighboring countries.
Adani has met with regional leaders including Bangladeshi Prime Minister Sheikh Hasina in September 2022 and then Sri Lankan President Gotabaya Rajapaksa in September 2022. reported The Hindu. His family members have also met senior officials from Myanmar and even Indonesia, according to the report.
Currently, the Adani Group has invested in or is in talks to develop infrastructure projects in three South Asian nations: Sri Lanka, Nepal and Bangladesh.
However, the repercussions of the Hindenburg Research report, which forced the company to shelve to a Rs 20 billion worth of share sale and led to a consequent deterioration in the firm’s market value, have raised questions about whether the setback will affect bilateral ties.
Sri Lanka
In Sri Lanka, Adani Green Energy has invested over $500 million in two 286 MW and 234 MW wind projects at Mannar and Pooneryn respectively. The company received provisional approval from Sri Lanka in August 2022.
It also has another port project in Colombo: a $700 million Western Container Terminal (WCT).
Interestingly, Adani received approval to build WCT after he was kicked out of a 2019 deal with Japan to develop the East Container Terminal at the Colombo port.
In Sri Lanka it is not clear how Adani became the investor of choice from India. But the billionaire has repeatedly denied having received favors from Prime Minister Narendra Modi to grow his business.
In June of last year, The Wire had reported that the head of Sri Lanka’s electricity authority, MMC Ferdinando, had told Parliament that President Rajapaksa had told him that “Indian Prime Minister Modi is pressuring him to hand over the project [de 500 MW de energía renovable] to the Adani group”.
Samagi Jana Balavegaya, the main opposition party in Sri Lanka, had affirmed that the Electricity Law had been specifically modified to favor Adani in the wind power project.
Two days later, Ferdinando retracted and resigned.
Sri Lanka is suffering from the worst economic crisis since its independence. India has provided nearly $4 billion in financial aid and has said it will support the island nation through long-term investment.
Officials told The Hindu that the government is monitoring the developments in the Adani group crisis, following the Hindenburg report. They told the newspaper that they hope to see more investment in infrastructure from India.
Nepal
Meanwhile, Nepali officials are also following developments in the Adani affair, according to the newspaper.
The Adani group has proposed laying transmission lines to connect Nepal’s hydroelectric projects to a planned renewable energy grid in South Asia. According to the newspaper, this network would supply power from Nepal and Bhutan to India, Bangladesh and possibly Sri Lanka in the future.
Interestingly, Adani received approval to build WCT after being kicked out of a 2019 deal with Japan to develop the East Container Terminal at Colombo port.
According to some reports, Adani has shown interest in hydroelectric projects in the Karnali basin. Last year, company officials visited Nepal for this purpose, but no announcement has been made yet, possibly due to the change of government, according to The Hindu.
bangladesh
The 1,600-megawatt Adani coal-fired power plant in Godda district of Jharkhand has suffered two delays. The thermal power plant was to supply electricity to Bangladesh in January 2022, and afterwards, according to reportsit was expected to go live on December 16, 2022.
It is an honor to have met Hon PM of Bangladesh Sheikh Hasina in Delhi. Her vision of her for Bangladesh is inspirational and stunningly bold.
We are committed to commissioning our 1600 MW Godda Power Project and dedicated transmission line to Bangladesh by Bijoy Dibosh, 16 Dec 2022. pic.twitter.com/LySohNBSrV
—Gautam Adani (@gautam_adani) September 5, 2022
It is now expected to start supplying electricity to Bangladesh in March this year.
The delay is due to Bangladesh’s concern over the “excessive” price of coal to be used in the plant, it said. money control. The coal will come from Australia’s Carmichael mine, owned and operated by Adani Power.
The Bangladesh Power Development Board (BPDB) had requested a review of the 2017 power purchase agreement, or a rebate on high power costs, UNB reported.
Adani Group Acquires 27.26% Stake From NDTV Roys Founders
Almost all of the power generated at the plant is destined for export to Bangladesh. The cost of the coal, including its transportation, will be borne by Bangladesh. The price of this coal was to be included in the power purchase agreement. The high price is apparently due to the fact that the power purchase agreement does not provide any discount for coal.
The plant will significantly increase India’s electricity exports to Bangladesh.
An official told BusinessToday that the BPDB considered the price of coal offered by Adani Power excessive. Apparently they had offered $400/mt, but it should be less than $50/MT, which is what BPDB pays for imported coal at its other power plants.
However, Adani Power has stated to business standard that BPDB has not required anything in the power purchase agreement for the project.
When asked about the Union Government’s position on the BPDB’s objection to the high coal prices quoted by Adani Power, Arindam Bagchi, spokesman for the Ministry of Foreign Affairs, told the Deccan Herald: “I don’t think we are involved in this. However, in the past, diplomats have cited this agreement between Adani Power and BPDB as an example of bilateral cooperation between the two nations.
money control reported, citing a 2020 Brickwork Ratings report, that the total cost of Adani’s Godda project is approximately Rs 14,817 crore. The cost has been financed at a debt-equity ratio of 68:32. The debt of Rs 10,075.42 crore has been raised from REC (50%) and PFC (50%).
Article republished from The Wire as part of an agreement between both parties to share content. Link to the original article:https://thewire.in/business/adani-group-projects-south-asian-nations
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