Synopsis
Former Andhra Pradesh Chief Minister Chandrababu Naidu pledged to act on bribery allegations against the previous administration and the Adani Group. The US SEC alleges kickbacks were offered to secure a solar power deal. Naidu acknowledged the damage to the state’s reputation and vowed to prevent future occurrences.
AgenciesA day after the US allegations of bribery involving Adani group and the previous YS Jagan Mohan Reddy administration in Andhra Pradesh surfaced, chief minister N Chandrababu Naidu on Thursday promised action based on evidence as he offered his comments on the issue.
Speaking in the state assembly, he termed the allegations “damaging” to Andhra Pradesh’s reputation and said necessary steps would be taken.
The allegations stem from court filings by the US Securities and Exchange Commission (SEC), which has alleged that industrialist Gautam Adani met the then CM Reddy in August 2021 after the state did not sign a power supply agreement with the government-run Solar Energy Corporation of India (SECI). The US Justice Department claimed that an unnamed Andhra Pradesh government official was offered kickbacks of ₹1,750 crore to facilitate purchase of solar power by state distribution companies from SECI.
Political tightrope
“More facts are yet to come to light. The government is also thinking about what steps to take as facts are being unravelled as we speak. We will take stock of the situation, see what needs to be done and will take action accordingly,” Naidu said in the assembly. “If there is wrongdoing, action must be taken. That’s the only way to ensure the same mistake is not repeated.”
He further said, “The issue that has come out today has badly damaged brand Andhra Pradesh in the public forum. It makes me very sad.”
Naidu’s Telugu Desam Party, a key ally of the BJP-led NDA, faces the tough challenge of being seen to be taking action against rival Jaganmohan Reddy and also not violating coalition dharma by playing the same tune as the opposition.
The state BJP too took a stronger stand than on the previous day. The BJP X handle posted a photograph of Reddy waving goodbye with the caption “Namapally to New York” (alluding to Reddy being on his way from Namapally jail to New York).
Contractual liability
Naidu’s apparent reluctance to initiate serious action appeared to be in stark contrast to his government’s white paper on power which has red-flagged the power purchase agreements, according to people familiar with the matter.
Under “inefficient governance”, the white paper stated that the agreements would result in a financial burden of ₹62,000 crore over 25 years. “On 1st December 2021, Government of Andhra Pradesh, APDISCOMS and SECI entered into a tripartite agreement for procurement of solar power for a capacity of 7,000 MW from SECI at a tariff of ₹2.49/unit This solar capacity shall be connected to inter-state network and is scheduled to be commissioned in phases with 3,000 MW in September 2024, another 3,000 MW in September 2025 and the balance 1,000 MW in September 2026,” said the white paper, released on July 9.
“Considering the lowest tariff of ₹1.99/unit discovered at the time of signing of tripartite agreement, the additional tariff burden on consumers is around ₹850 crore per year… the total additional burden due to procurement of solar power from SECI is around ₹3,850-4,350 crore per year. Net present value of additional burden due to this for 25 years is around ₹62,000 crore.”
If the state government scraps the agreement, it would need to pay ₹25 lakh per MW as penalty to Adani group for 7,000 MW. However, it can be saved by the integrity pact that the private group has signed with SECI, said experts. In case of any violation of the pact (which includes the private company indulging in malpractices), the state government would not need to pay the penalty, they said.
Focus On other projects
Following the US indictment, trade unions brought into focus other projects including award of Krishnapatnam and Gangavaram port projects. CPI general secretary D Raja told ET, “There is deeper connivance here. The trade unions have been raising the issue of government resources like land being given away practically free or at very nominal rates to Adani group.”
