New Delhi: On September 15, 2021, the Solar Energy Corporation of India (SECI) made an unexpected approach to the government of Andhra Pradesh, proposing the state sign India’s largest renewable energy contract. This came as a surprise, especially since, just two years earlier, the state’s energy regulator had projected no immediate need for solar power, recommending a focus on other renewable sources capable of providing 24-hour energy.
Despite this prior assessment, the next day the state cabinet, led by Chief Minister YS Jagan Mohan Reddy, gave preliminary approval for the deal, as per cabinet records seen by Reuters. While the SECI letter didn’t specify the energy supplier, it was widely known that the agency had contracts with just two suppliers, one of which was Adani Green, a part of billionaire Gautam Adani’s conglomerate, according to statements from the companies involved.
By November 11, the state had received regulatory approval, and on December 1, Andhra Pradesh formalized the procurement agreement with SECI for a deal that could eventually surpass $490 million annually. Around 97% of that amount is expected to go to Adani Green, as per documents reviewed by Reuters.
The unusually swift approval process—just 57 days from SECI's approach to regulatory consent—has raised eyebrows. Experts and former officials, including a former state power regulator and an energy legal expert, noted the speed as remarkable, given the complexity of such agreements. The deal is now under investigation by U.S. prosecutors, who have indicted Adani and other executives for alleged involvement in a bribery and securities fraud scheme across several Indian states, including Andhra Pradesh. U.S. authorities claim that $228 million was allegedly offered to an unnamed Andhra Pradesh official to secure a solar power deal with Adani Green.
Reuters examined 19 state government documents and interviewed more than two dozen state and federal officials, along with energy and legal experts, most of whom requested anonymity due to the sensitive nature of the case. The findings paint a picture of how political leaders in the state overruled recommendations from energy and finance officials to approve the massive deal with Adani. Some officials have warned that the contract could stretch the state's finances, potentially leaving taxpayers burdened with the costs of thousands of megawatts of power that the state does not need.
Adani Green has not responded to questions from Reuters regarding the alleged corruption or the expedited approval process, though Adani Group has previously labeled the allegations as “baseless.” SECI, in its statement, emphasized that it was up to states and their regulators to determine how much power to purchase, but declined further comment.
Chief Minister Reddy’s office, though not named in the U.S. indictment and having lost power in recent elections, referred to a statement from November 28 in which he denied any wrongdoing. He defended the deal, claiming it would provide free power to farmers. The state’s energy regulator, APERC, responsible for overseeing the deal’s due diligence, did not respond to repeated requests for comment on its processes or the U.S. allegations.
For much of September 15, 2021, then-energy minister Balineni Srinivasa Reddy was unaware of the proposed solar deal, he told Reuters. Late that night, he received a call from his office about the proposal, which required his immediate approval for the following day’s cabinet meeting. Srinivasa Reddy said he had never been rushed to sign off on a file so quickly and was given little time to review it. He only approved the proposal after being assured by a senior official that the contracting party was SECI, although he was unaware that Adani was the supplier.
The following day, the cabinet gave its initial approval for the deal, allowing the process to move swiftly. On October 21, the Andhra Pradesh Power Coordination Committee (APPCC), tasked with reviewing the deal, filed a report recommending approval. A week later, the state cabinet officially agreed to procure 7,000 megawatts of solar power from SECI, overriding objections from the finance and energy departments that the deal was not in the state’s best interest.
On October 28, the same day as the cabinet’s decision, the finance department had submitted a report warning that solar prices were falling and that future deals would likely be cheaper. It also raised concerns about the long duration of the 25-year contract, especially with power not expected to come online until 2024. The treasury echoed these concerns, questioning whether the deal represented value for money. However, the cabinet dismissed these objections, proceeding with the deal.
The contract stipulates that Andhra Pradesh will pay 2.49 rupees per kilowatt-hour for the solar power once it becomes available. Adani Green has indicated that the supply will be delayed beyond 2024 due to issues with "grid availability." However, an analysis by the office of Chief Minister N. Chandrababu Naidu, who ousted Reddy's government, suggests that the state will likely end up paying more than agreed, due to the failure to account for taxes and duties that typically factor into such contracts. A state official familiar with the matter said that once these taxes and duties are added, Andhra Pradesh could end up paying up to 23% more than the agreed price.
The state is now considering suspending the deal in light of the U.S. indictment of Gautam Adani. A decision on this matter could come by the end of the year, according to an official. If the deal proceeds, Andhra Pradesh’s treasury will be responsible for paying hundreds of millions of dollars annually to Adani once the power is delivered, a financial burden comparable to the state’s annual spending on social security and nutrition programs.