Adani Group: Weathering Bribery Allegations with Solar Power Resilience

Adani Group faces bribery allegations concerning a solar power contract, but analysts suggest the company's low tariffs and potential to find new buyers could mitigate negative impacts if the pact is canceled. The allegations involve a USD 265 million bribe to secure an 8 GW electricity supply contract.

Adani Group is currently embroiled in bribery allegations connected to its solar power contract, though experts believe its lower tariffs and ability to attract new buyers might lessen adverse effects if the agreement is annulled. The company's founder, Gautam Adani, faces charges from US authorities involving a scheme offering a USD 265 million bribe to Indian officials to secure an 8 gigawatt electricity supply contract through Adani Green Energy Ltd (AGEL). Adani Group has denied all accusations.

Nomura's report suggests that if Adani promoters are proven guilty, the potential penalties might be manageable, as they could amount to only up to three times the bribe's value. With various solar projects already commissioned in Gujarat at competitive tariffs, analysts believe AGEL could re-contract these projects through auctions without significant tariff reductions, even if PPAs are canceled.

Despite the US indictment alleging substantial bribes to influence governmental agreements, analysts assert that AGEL's affected projects remain viable compared to competitors like ReNew. Adani Group maintains access to financing, as no breach in anti-corruption covenants has been proven. The company's improved liquidity management could help navigate the economic challenges stemming from these allegations.

(With inputs from agencies.)