New Delhi: Tamil Nadu has launched a probe into allegations that the Adani Group imported low-quality coal and sold it for far higher rates to the Tamil Nadu Generation and Distribution Corporation (TANGEDCO), a state-owned power company.
The state’s Directorate of Vigilance and Anti-Corruption (DVAC) has been instructed to conduct a preliminary enquiry and submit its report in two months, as per several news reports including by The News Minute and The Hindu.
An investigation by the Organized Crime and Corruption Reporting Project (OCCRP) and British daily Financial Times published on May 22 found that the Adani Group had imported low-quality coal, passed it off as coal of superior quality and sold it to TANGEDCO for three times the price in 2014.
This was a huge loss not just for the state exchequer but also for the environment, because the low-quality, high-polluting coal was subsequently used to fire thermal power plants.
Preliminary inquiry and report
As per The Hindu, Tamil Nadu’s DVAC has now received clearance from the state government to register a preliminary inquiry and investigate allegations around the import of coal by TANGEDCO.
Companies including the Adani Group, which sold coal to the state-owned power company, will come under the scanner.
The news report quoted unnamed “official sources” who said the DVAC had obtained sanction under provisions of Section 17A of the Prevention of Corruption Act, 1988, based on a complaint lodged by the Chennai-based anti-corruption NGO Arappor Iyakkam.
According to the OCCRP’s report published in May, Arappor Iyakkam filed a complaint against TANGEDCO in 2018 to the then AIADMK-run state government. The NGO estimated that TANGEDCO overpaid Rs 6,000 crore for coal from all vendors between 2012-2016.
During this time, TANGEDCO gave nearly half the value of its tenders to the Adani Group, the OCCRP reported.
However, as per a source quoted but not named by The Hindu, the 2018 inquiry into the losses caused by the coal deals was closed as there was “no prima facie evidence to proceed further in the case”.
But now, a special team led by an officer in the rank of a superintendent of police has been formed to investigate the issue, per The Hindu. According to The News Minute, the DVAC has been asked to conduct a preliminary inquiry and submit a report within two months.
Also read: India is On a Renewables Spree But is Pushing for More Coal-based Power Plants. What’s Happening?
Irregularities in coal imports and sales
The investigation into imported coal of low quality being sold to TANGEDCO for far higher rates revealed that at least two dozen shipments of coal that arrived on the Tamil Nadu coast between January 2014 and October 2014 were initially priced as low-grade coal. However, they were later sold by the Adani Group to TANGEDCO at triple the original price.
In its lead story on May 22, Financial Times reported that the Adani Group is “suspected of fraud by selling low-grade coal as high-value fuel”.
Adani, incidentally, has rejected all accusations of inflating prices.
On May 24, two days after the OCCRP report highlighting the coal scam was published, 21 international organisations wrote a letter to Chief Justice of India D.Y. Chandrachud and the Supreme Court requesting they expedite the resolution of a case filed by the Directorate of Revenue Intelligence (DRI) against Adani Group firms.
In March 2016, the DRI initiated a probe against a few Adani Group companies for alleged overvaluation of coal imports from Indonesia between 2011 and 2015.
Though India’s renewable energy resources are fast increasing, coal is still the mainstay: around three-quarters of India’s electricity is still fired by coal.
Illnesses and deaths caused by air pollution – a result of burning coal – are huge concerns in the country. In 2022, India had the eighth most-polluted air, and was home to 12 of the 15 most-polluted cities in the world. A recent report showed that in 2021, India witnessed the highest number of deaths – 1,69,400 – of children under five years of age that were linked to air pollution.
The coal import scam holds enormous significance since it not only means that TANGEDCO – a state government-run company – suffered huge losses (worth around Rs 6,000 crore), but also because the low-quality coal that was passed off as coal of superior grade was subsequently used to fire thermal power plants in Tamil Nadu, potentially adding to the burden of air pollution.
