The All India Power Engineers’ Federation (AIPEF) has written to the Prime Minister and other government offices demanding that the government direct the Adani group to hand over the documents sought by the Directorate of Revenue Intelligence (DRI) in its probe into the over-invoicing of coal imports in the case of the Kawai power plant in Rajasthan.
On June 13, the DRI filed an affidavit with the Bombay High Court challenging a petition by Adani Enterprises Limited (AEL) that had sought the quashing of the DRI’s letters regotary (letters of request from one court to a foreign court for any judicial assistance) to other countries.
The DRI told the court that AEL is trying to “impede” its investigations into financial fraud by several corporate entities (including Adani Group firms) in the power sector.
Between 2013 and 2018, Adani’s 1,320-megawatt thermal power generation plant at Kawai in Baran district operated on imported coal from Indonesia, because cheaper domestic coal was not available. Adani later claimed that a compensation of Rs 5,100 crore be paid on account of higher cost of Indonesian coal.
In September 2018, the Appellate Tribunal for Electricity (APTEL) had directed the public-sector electricity distribution companies (discoms) in Rajasthan to pay Rs 3,591 crore to Adani Group-owned Adani Power Rajasthan Limited (APRL). Following an appeal by the discoms before the Supreme Court, the apex court in October 2018 reduced the amount payable to around Rs 2,500 crore that Rajasthan had to pay.
However, the DRI has estimated 50 to 100% cost inflation on the imported coal.
In an alert issued to various authorities, quoted by the AIPEF in its letter, the DRI had stated that this was being done for “(i) siphoning-off money abroad and (ii) to avail higher power tariff compensation based on artificially inflated cost of the imported coal.”
The DRI also noted that “while Indonesian Coal was directly shipped from Indonesian ports to the importers in India, the import invoices were routed through one of more intermediaries based in Singapore, Dubai, Hong Kong, British Virgin Islands (U.K.) etc. for the purpose of artificially inflating its value.”
The AIPEF in the letter dated June 24 lays out some indicative calculations to assess the financial impact of the over-invoicing of coal.
If the over-invoicing is taken to be 50%, this means that in case of coal with a genuine cost of 40 USD/tonne, the element of over-invoicing would be US$20 above 40.
The AIPEF says in the case taken here, if the “fuel supplier had over invoiced Indonesian coal by 50%, the fuel supplier would have over charged the station by ₨ 3,326 crore.”
“In case of over invoicing at 100%, the coal of 40 USD would be billed at 80 USD and the impact over 5 years would be ₨ 6,652 crore.”
“Due to over invoicing Rajasthan consumers have been made to pay Rs 2,500 crore to Adani, mainly due to fraudulent over invoicing of coal,” says AIPEF.
The countrywide power engineers’ association claimed in the letter that once over-invoicing is established — after Adani is directed to hand over the documents — the claim of Rs 5,100 crore made by Adani would be reduced to less than Rs 1,000 crore.
“The government should issue instructions to hold in abeyance all claims /petitions of Adani till such time as the required documents are handed over to DRI,” said the letter, urging the government to consider it “a sacred task to support the efforts of DRI”.
Besides the Prime Minister’s Office, the letter has also been copied to Cabinet Secretary, NITI Aayog, Power Minister, Finance Minister, Coal Minister, DRI headquarters, Central Electricity Regulatory Commission (CERC) Secretary, Gujarat government, Rajasthan government, Haryana government, Rajasthan Rajya Vidyut Utpadan Nigam, Gujarat Urja Vikas Nigam, Rajasthan Electricity Regulatory Commission (RERC) secretary and APTEL.