The Andhra Pradesh Solar Power Deal Under Adani Green. A $228 Million Question Was It Outright Manipulation?

In what can only be called as a ‘curious’ case now under scrutiny by U.S. prosecutors, a $228 million offer allegedly made to an unnamed Andhra Pradesh official has raised questions about the massive solar power deal involving Adani Green Energy, the renewable energy arm of the Adani Group.

The allegations center around an unusually swift approval process for a deal that some officials argue was unnecessary and financially burdensome for the state of Andhra Pradesh.

The ‘Curious’ Solar Power Deal

On September 15, 2021, the Solar Energy Corporation of India (SECI) sent an unexpected proposal to the Andhra Pradesh government.
SECI, a federal agency responsible for developing India’s solar sector, sought to know whether the southeastern state would be interested in signing what was touted as India’s largest renewables contract.

The proposal seemed to come “out of the blue,” especially considering that just two years earlier, Andhra Pradesh’s energy regulator had concluded in a 10-year forecast that the state had no short-term need for solar power. Instead, the regulator had recommended focusing on renewable energy sources that could ensure 24-hour energy supply.

Despite this prior assessment, the very next day after SECI’s approach, the 26-member Andhra Pradesh cabinet, led by then-Chief Minister YS Jagan Mohan Reddy, gave preliminary approval for the deal.

By November 11, the Andhra Pradesh Electricity Regulatory Commission (APERC) granted its nod, and on December 1, the state authorities signed a procurement agreement with SECI.

The entire process, from SECI’s proposal to the final agreement, took just 57 days—a timeframe that experts describe as “unusually fast,” even though approval times for such projects can vary.

The deal involves the procurement of 7,000 megawatts of solar power, potentially valued at over $490 million annually. Documents related to the agreement reveal that 97% of the power will be supplied by Adani Green, the renewables arm of billionaire Gautam Adani’s Adani Group.

The Political Dimension

YS Jagan Mohan Reddy, who led the state government at the time, was not named in the U.S. indictment. However, questions about his administration’s role persist. In a statement issued on November 28, Reddy denied any bribery allegations and justified the deal on the grounds that it provided free power to farmers, a politically sensitive issue in the state.

Since losing power in the 2024 state elections, Reddy’s office has declined to respond to further inquiries.

APERC, the body tasked with regulating the state’s power sector and conducting due diligence on the deal, has remained silent, refusing to respond to repeated requests for comment regarding its approval processes or the allegations raised by U.S. prosecutors.

Why Is the Deal Under Scrutiny?

To understand the magnitude of the situation, 19 state government documents—many previously unreported—were analyzed, and over two dozen state and federal officials, independent energy experts, and legal professionals were interviewed by a leading media house.

The findings suggest a pattern of political leaders overruling recommendations from finance and energy officials to push through the Adani deal.

The Financial and Practical Concerns

Critics argue that the solar deal was unnecessary and may impose significant financial strain on Andhra Pradesh’s coffers. The state’s energy regulator had already determined there was no short-term need for additional solar power, given the existing energy mix and the need for reliable 24-hour energy sources.

As a result, some officials believe taxpayers may ultimately bear the burden of paying for thousands of megawatts of surplus energy that the state does not need.

A former state power regulator and energy legal expert noted that the deal’s expedited timeline raised eyebrows. While energy procurement agreements can sometimes move quickly, the 57-day turnaround in this case stands out, particularly given the scale and financial implications of the contract.

Adani Group’s Response and SECI’s Role

The Adani Group has dismissed the allegations as “baseless,” while SECI has maintained that it is up to states and their regulators to decide how much power to purchase. In a statement, SECI refrained from commenting further on the specifics of the deal.

The Correct Picture

When Andhra Pradesh signed up for solar power from Adani Green Energy Limited (AGEL) through SECI’s (Solar Energy Corporation of India Limited) manufacturing-linked solar scheme, the deal sounded promising.

The tariff of ₹2.49 per kWh looked like a steal. Fast forward to 2024, and that “steal” is becoming a burden. With the imposition of a basic customs duty (BCD) on solar panels and cells from April 2022, Andhra Pradesh could now be paying around ₹3.069 per kWh—50 paise more per unit.

The ₹2.49 dream is slowly fading, replaced by the reality of an extra ₹850 crore per year. The Andhra Pradesh Power Coordination Committee (APPCC) flagged this in 2021, predicting that duties and taxes could push the tariff higher. They weren’t wrong. The BCD, coupled with GST, is expected to add ₹0.429 per kWh from duties and another ₹0.12-0.15 per kWh from GST.

How?

Blame it on timing or poor foresight, but when Andhra Pradesh inked the power supply agreement in December 2021, the customs duty wasn’t yet in force. Come April 2022, the duty hit, and SECI informed the state that this cost would be passed on. Andhra Pradesh agreed—though perhaps reluctantly.

If the state were to buy power today, it could get it for an all-inclusive ₹2.50 per kWh. But being tied into the Adani-SECI agreement means paying the premium.

Former Chief Minister Y.S. Jagan Mohan Reddy has dismissed these allegations as baseless, calling the agreements “steps towards wealth creation.” He defended the deal, citing long-term savings, particularly with the inter-state transmission system (ISTS) waiver, which he claims will save the government ₹1 lakh crore over 25 years, plus ₹4,440 crore in immediate ISTS waivers.

Adani Group is known for its sharp business acumen. Passing on the BCD costs might be seen as a logical move from a corporate perspective, but for Andhra Pradesh, it feels like a raw deal. What began as a clean energy initiative is now clouded by allegations of corruption and rising costs.

The Verdict

The controversy surrounding the Andhra Pradesh solar deal illustrates broader concerns about governance, transparency, and accountability in India.

As the details emerge, it raises solid questions about the integrity of decision-making processes and whether political and corporate interests are being prioritized over public good.

But perhaps, the rawest deal is for the taxpayers!