Andhra Pradesh govt may rethink Adani's solar deal amid bribery allegations

According to reports, Andhra Pradesh CM N Chandrababu Naidu is personally reviewing the situation and is expected to discuss the matter with his cabinet on Tuesday

The Andhra Pradesh government, led by Chief Minister N Chandrababu Naidu, is assessing its options regarding a 7,000 MW solar power project with the Adani Group. This project has come under scrutiny following Rs 1,750 crore bribery allegations linked to both Adani Green Energy Limited (AGEL) and Opposition leader and former Chief Minister YS Jagan Mohan Reddy.

 

Naidu is personally reviewing the matter and is expected to discuss it with his cabinet on Tuesday, December 3. A detailed note has been prepared for him, outlining the financial implications of various courses of action available to the state.

 

Options on the table

 

According to The Economic Times, the state government is inclined to urge the Solar Energy Corporation of India Limited (SECI) to terminate the power purchase agreement (PPA) with AGEL, citing concerns over integrity. The government could invoke the integrity clause in the agreement and seek a thorough investigation into the bribery allegations.

 

Another option involves renegotiating the tariff with AGEL. While the company initially proposed a tariff of Rs 2.49 per kWh, further analysis suggests additional costs, including customs duties, GST, and transmission losses, could raise the effective tariff to Rs 3.869 per kWh. Over 25 years, this would amount to a total power bill of Rs 1.61 trillion.

 

The final option is to terminate the power supply agreement with SECI entirely. However, this would entail a penalty of Rs 2,100 crore as stipulated in the agreement. Such a decision may not be feasible given the state’s financial constraints and its ongoing efforts to attract investments.

 

The state is expected to adopt a cautious approach, balancing fiscal prudence with the need to address allegations of misconduct in the high-profile project.