Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
Adani Group passed off low-quality coal as far more expensive cleaner fuel in transactions with an Indian state power utility, according to evidence seen by the Financial Times that throws fresh light on allegations of a long-running coal scam.
The documents, secured by the Organized Crime and Corruption Reporting Project (OCCRP) and reviewed by the FT, add a potential environmental dimension to accusations of corruption associated with the Indian conglomerate. They suggest that Adani may have fraudulently obtained bumper profits at the expense of air quality, since using low-grade coal for power means burning more of the fuel.
Invoices show that in January 2014 Adani purchased an Indonesian shipment of coal said to contain 3,500 calories per kilogramme.
The same shipment was sold to the Tamil Nadu Generation and Distribution company (Tangedco) as 6,000-calorie coal, one of the most valuable grades.
Adani appears to have more than doubled its money in the process, after transport costs.
The FT has also matched documentation for a further 22 shipments in 2014 involving the same parties that indicates a pattern of grade inflation in the supply of 1.5mn tonnes of coal.
Adani sourced the coal in Indonesia from a mining group known for its low-calorie output, at prices consistent with low-grade fuel. It delivered the coal to India’s southern-most state for power generation, fulfilling a contract that specified expensive high-quality fuel.
More than 2mn people are killed in India each year by outdoor air pollution, according to a 2022 study in The Lancet, while other studies found significant increases in child mortality for hundreds of miles around coal-fired power plants.
Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
Another study a decade ago found that coal-fired power plants, which supply about three-quarters of India’s electricity, accounted for roughly 15 per cent of the country’s man-made emissions of fine particulate matter, 30 per cent of nitrogen oxide and 50 per cent of sulphur dioxide.
“Public health has definitely taken a back seat in India against the interest of the power sector,” said Sunil Dahiya, a New Delhi-based analyst at the Centre for Research on Energy and Clean Air.
Opposition politicians last year called for an investigation into Adani after the FT reported that between 2021 and 2023 the group paid more than $5bn to middlemen for coal imported to India far in excess of market prices.
The latest revelations come as Adani seeks to rebrand itself into a big renewable energy player, including by building one of the world’s largest wind and solar parks in Khavda, near the Pakistan border. The group, which denies wrongdoing, remains one of India’s biggest importers of coal.
The findings are also likely to add to an intensifying political debate in India about the power and influence enjoyed by billionaires including Gautam Adani, whose names and vast wealth have surfaced during the current election campaign in which Narendra Modi is seeking a third term as prime minister.
Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
India’s Directorate of Revenue Intelligence (DRI), the finance ministry’s investigative unit that polices economic crime, opened a probe into coal prices in 2016. The prosecution of a businessman related to $68mn-worth of alleged coal price inflation is one of the few tangible outcomes of that ongoing probe.
New documents obtained by the OCCRP and shared with the FT show how in December 2013 the MV Kalliopi L ship left Indonesia carrying coal with a listed price of $28 a tonne. When it arrived in India in the new year, Adani sold the coal to Tangedco for $92 a tonne.
The coal came from the Indonesian mining group PT Jhonlin’s operations in South Kalimantan, where the ship was loaded.
An export declaration by PT Jhonlin stated the end buyer was Tangedco, and listed Adani’s details as an intermediary. However, Jhonlin’s invoice went to the British Virgin Islands-based Supreme Union Investors, which was charged $28 per tonne.
A week later Supreme Union Investors invoiced Adani in Singapore for the shipment at $34 per tonne, stating that the coal contained 3,500 calories per kg.
On Adani’s subsequent invoice to Tangedco the quality jumped to 6,000 calories — as did the price, to $92 per tonne.
Other documents suggested the discrepancy was not isolated. A 2014 purchase order lists 32 deliveries of 6,000-calorie coal to Tangedco by Adani, totalling 2.1mn tonnes at $91 per tonne. The order was released under Indian freedom of information laws following a request by OCCRP.
According to internal Jhonlin records, Supreme Union Investors acted as the intermediary for 24 of the cargoes listed in the Tangedco purchase order, buying them at an average price of $28 per tonne. According to data from Argus, the cargoes were priced a little above the benchmark for 4,200-calorie coal from Indonesia which, at the time, traded for between $22 and $26 per tonne.
The FT matched 22 of the 24 voyages with filings from India; in all 22 shipments, Tangedco was the end buyer at an average price of $86 per tonne. The price is in line with Argus’s estimates of local market prices for high-grade, 6,000-calorie coal, which were between $81 and $89, including freight costs.
