India's Andhra Pradesh state likely to suspend Adani power deal, sources say
Suspension of deal likely to be announced soon, source says
Would be first such move by an Indian state since US indictment
Adani has said charges in US indictment baseless
Clauses in power agreements allow Indian state to revoke deals
Adds background, details in paragraphs 3, 4, 8
By Sarita Chaganti Singh and Aftab Ahmed
NEW DELHI, Nov 26 (Reuters) -India's Andhra Pradesh state is likely to suspend a power purchase deal linked to Adani Group due to the U.S. indictment of the group's billionaire founder Gautam Adani over an alleged bribery scheme, two state government sources said.
The southern state will ask the federal government and the Solar Energy Corporation of India (SECI), which awards power supply contracts to companies like Adani, to investigate the charges, the sources said.
The suspension, likely to be announced soon, would be the first such action by an Indian state government after U.S. prosecutors charged Gautam Adani and seven others with agreeing to pay bribes of $265 million to unidentified Indian government officials to obtain solar power-supply contracts.
Most of the alleged bribes - $228 million - were paid to a government official to get Andhra Pradesh's state electricity distribution companies to agree to purchase power, the U.S. indictment said. Adani has said the allegations are baseless
Andhra Pradesh is ruled by Prime Minister Narendra Modi's key ally Chandrababu Naidu, whose party has the second highest number of parliamentary seats in the coalition government formed after the main Bharatiya Janata Party failed to get a majority in national elections concluded in June.
Modi's federal government has so far not commented on the U.S. indictment of Adani.
The power supply to Andhra Pradesh under the SECI agreement was scheduled to start from next year, according to one of the sources.
"The decision will be taken very soon," the second source said about the planned suspension.
Clauses in the power supply agreements provide for Indian states to terminate contracts and also bar the companies involved from any future bidding if the bidder has committed a serious transgression.
Adani Group and the Andhra Pradesh government did not immediately reply to Reuters requests for comment.
Reuters reported earlier on Tuesday that Andhra Pradesh was exploring the possibility of cancelling a power supply contract linked to Adani Group.
Andhra Pradesh's previous ruling party - YSR Congress Party - under whose administration the alleged misconduct took place, last week denied any wrongdoing.
Reporting by Sarita Chaganti Singh Aftab Ahmed. Editing by Louise Heavens and Mark Potter
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
