Gautam Adani ramps up share of coal imports as power crisis grips India

The infrastructure empire of Asia’s richest man Gautam Adani has increased its share of India’s coal imports to more than a third, as the conglomerate cashes in on the country’s acute power shortage.

India’s thermal coal imports hit a monthly record in June of 20.9mn tonnes, after Prime Minister Narendra Modi’s government called for increased purchases in order to overcome a fuel shortage at domestic power plants.

Adani Enterprises, the country’s biggest coal trader, more than doubled its share of the market in June from last year to bring in 7.3mn tonnes, according to market data company CoalMint. Adani Power, the country’s largest private power company, increased coal imports to 1.4mn tonnes in June from 154,000 tonnes the previous year.

Together, the Adani subsidiaries accounted for 35 per cent of India’s coal imports from April to June this year, reflecting the group’s growing dominance of the country’s infrastructure. Their share from June 2021 to June 2022 was 30 per cent.

Adani, a first-generation tycoon worth $110bn according to the Bloomberg Billionaires Index, has a stake in almost every part of India’s energy chain, from mining to transport, power production and transmission. Analysts said his vertically integrated empire was well-positioned to benefit from record coal prices.

“Hyperinflation in energy means more profits for the Adani Group,” said Tim Buckley, an energy economist and founder of Climate Energy Finance Australasia, because it “gets many bites of the bigger cherry”.

The Adani Group was already growing rapidly before New Delhi intervened to avert painful blackouts.

Adani Ports reported earnings before interest, taxation, depreciation and amortisation for the year to March of Rs91.2bn ($1.1bn), a 21 per cent increase year on year. About one-third of the cargo handled by Adani Ports is coal.

Adani Enterprises’ mining operations in India surged in the year ending in March, increasing 58 per cent year on year to 27.7mn tonnes, and are set to expand further after the company won bids for two more commercial coal mines.

Adani Power trebled year-on-year profits after tax for the year ending in March to Rs49.1bn. A massive one-off Rs59bn payment from indebted state electricity distributors during the year also buoyed profits.

“Adani is one of the prominent beneficiaries of the ongoing coal shortage situation in India,” said Sunil Dahiya, an analyst at the New Delhi-based Centre for Research on Energy and Clean Air think-tank.

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Adani has also benefited from changing government regulation, after New Delhi ordered a greater share of coal supplies to come from imports and changed rules to allow power companies to pass on the rising costs to consumers.

“Our nation’s domestic production cannot keep up with the increasing demand,” the Adani Group said in a statement. It added that coal prices were “driven entirely by market forces.”

Adani initially emerged as the lowest bidder for an unprecedented maiden imported coal tender by state-owned Coal India, which had been ordered by the government. However, the contract was not ultimately awarded.

As well as mining in India, Adani operates a privately held mine in Indonesia, the source of the bulk of its coal imports. The group has also recently started shipping coal from its controversial Carmichael mine in Australia.

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The steep cost of energy imports helped swell India’s current account deficit to a record $25.6bn in June. Coal-related imports were the second highest drain on currency after oil products, the commerce ministry said this month, up 242 per cent year on year to $6.4bn.

Modi has made energy security a priority, focusing on increasing coal mining and developing renewable energy sources. He committed to “phase down” coal use at the COP26 climate conference last year.

Along with being the country’s biggest operator of coal-fired power plants, Adani is one of the biggest players in India’s renewables drive. His group recently committed to investing $50bn in developing green hydrogen in a tie-up with French oil major TotalEnergies.

Additional reporting by James Fernyhough in Melbourne