‘Adani’s solar contract has tariff lower than competition, can find new buyer’

New Delhi: Adani Group’s solar power contract, which is at the centre of bribery allegations, has tariffs that are lower than competition and can find new buyers, according

to analysts.

US authorities have charged Chairman Gautam Adani and others for being part of a scheme to offer $265 million bribe to Indian officials to gain a contract to supply 8 gigawatt of power generated by Adani Green Energy Ltd (AGEL).

“If Adani promoters are found guilty, we believe the size of potential penalty is manageable given it is up to three times the value of the bribe,” Nomura said in a report.

The brokerage said there are about 1.8 GW solar projects commissioned in Gujarat from February-March 2024, with tariff of Rs 2.42 per unit under the 25-year power purchase agreements (PPAs).

These operational projects are running under 5 special purpose vehicles, namely Adani Green Energy Twenty Four A Ltd (AGE24AL), AGE24BL, AGE25AL, AGE25BL, and AGE26BL. These may have project debt of about $685 million, if assuming capex cost of $50,000 per megawatt and 75 per cent capex as debt.

“Frankly speaking, we do not view such tariff levels as high, compared with (competitor) ReNew’s solar operational projects at average tariff of Rs 2.5 per unit, and we believe even with possible PPA cancellation on these affected projects, AGEL should be able to recontract these projects via auctions with no significant downward revisions in tariff levels,” it said.

The US indictment indicated that most of the alleged bribes were paid to a government officer to get Andhra Pradesh’s discom to agree to purchase electricity at 7 GW capacity through Solar Energy Corporation of India Ltd.

“We see the average tariff in AGEL’s affected projects as comparable to that of ReNew’s and we also believe the affected projects can re-contract the PPAs when needed.