Adani in Southasia
The Adani Group has been making big news for the wrong reasons. Hindenburg Research's report accusing the group of "the largest con in corporate history" sent Adani stocks plummeting, wiping well over USD 100 billion off the group's valuation even as the conglomerate denied doing any wrong. Suddenly Adani is facing extra scrutiny from investors, governments and the media – but activists who had long alleged malpractice in Adani projects in India and across the region, as well as journalists who earlier exposed the group's questionable practices, are left to wonder what took so long.
The world's focus has mostly been on India, but the Adani Group's vast footprint has left marks across much of the rest of Southasia too. In Bangladesh, pressure is building for the government to reconsider a power deal with Adani that may not be in the country's best interests. In Sri Lanka, like in Bangladesh, there are questions over what role the Indian government played in securing ongoing Adani projects. In Myanmar, following the 2021 coup, there has been scant attention to how Adani has continued with controversial projects under the rule of the unelected military government. And in India, there are the perennial questions over Gautam Adani's closeness to Narendra Modi, and allegations of special treatment for his business house.
In our latest edition of Southasian Conversation, recorded on 11 April 2023, we look at the long reach of the Adani Group – from energy to transport and logistics, from India to Sri Lanka and Bangladesh and Myanmar – to draw attention to the conglomerate's record in Southasia, and to ask not just what it says about the Adani Group itself but also about power, politics and diplomacy in the region.
• Ravi Nair – Investigative journalist
• Zia Hassan – Economist and political commentator
• Rawan Arraf – Executive Director, Australian Centre for International Justice
• Rathindra Kuruwita – Journalist and researcher
• Roman Gautam – Editor, Himal Southasian
This is a machine-generated transcript of the event and may contain inaccuracies. For exactness, please refer to the recording.
Roman Gautam: Thank you once again to everyone who's joined us, and an especially big thank you to our panellists, we will introduce them to all of you in a little bit more detail very shortly. And just to give you all a sense, I think we all know why we're here, but just a reminder that of course, Adani has been making news because of the Hindenburg report and the information revealed there. Hindenburg calls it the biggest con in corporate history. Adani denies the claims of Hindenburg. Adani has also said that this is basically a jealous attack on India's success story. And while of course that has brought a lot of scrutiny onto the Adani Group, a lot of that scrutiny has been specifically on India, understandably so, since that is where Adani has the bulk of the group's interests and also that is home base for the corporation. But at the same time, Adani has been pushing to expand its regional footprint, not to speak of its global footprint. And there are multiple Southasian countries where the Adani Group has been at work. And in each of those countries with journalistic scrutiny in the best journalistic traditions, there have been plenty of questions being raised, some of them specific to individual places, a fair number of them I think in common. I think there are questions of how particular projects and contracts were awarded, are there contracts of due diligence on the part of the Adani Group? There are questions of political influence, including on more than one occasion claims that there was direct pressure on neighbouring governments from the Indian government to award certain contracts to the Adani Group.
In a way, I think the Adani Group is maybe a good way for us to look at all of these questions combined, the way that corporations and corporate power is functioning in our region and in our countries, the way that our governments are reacting to and working with that corporate power, and also questions of what this means from a more democratic standpoint. Are the deals that are being struck really being struck in ways that are democratically transparent and democratically beneficial to all of the people of Southasia. So that's why we're here we're trying to open the lens to look at Adani in India, of course, where there is a lot of scrutiny, but also elsewhere across Southasia, primarily in Bangladesh, Sri Lanka, India, and Myanmar. Though I will say here very briefly that Adani does also have a wider footprint, they've expressed interest in a hydropower project in Nepal. So far, no movement beyond that. And in Bhutan, there is a power transmission project that Adani is also involved in. so it is of course a larger footprint but I think the places where Adani has the most interest regionally and also has done the most work already are the four countries that we are looking at today.
With that, I'll hand it over to my colleague, Raisa, with a big thank you to Raisa and also a silent hand of thanks for the team at Himal Southasian who worked hard to put all of this together and organise everything. So thank you guys, thank you to everyone behind the scenes. Raisa, if you please introduce all of the panellists?
Raisa Wickrematunge: Thanks, Roman. Without further ado, I'll just introduce all the panelists today, and we're thankful to all of you for joining us and sharing your expertise with us. Joining us from Bangladesh we have Zia Hassan, who is a development economist and the author of Development Mirage: The Untold Story of Bangladesh's Economic Development. We also have Rawan Arraf, who is the principal lawyer and executive director at the Australian Centre for International Justice. From India, we have Ravi Nair, who is a freelance investigative journalist based in India with bylines in the News Click, The Wire, Money Life, Frontline, and Janta Ka Reporter. And from Sri Lanka, we have Rathindra Kuruwita, who is a journalist and researcher based in Colombo, with a focus on security and international relations. And we of course have Roman, our editor who will be moderating the conversation today.
Thanks, everyone for joining us and I'll hand over to Roman now to take on moderating.
Roman Gautam: Thank you so much, Raisa.
Ravi, I was hoping that we could start with you, because ground zero, the centre of gravity, whatever you want to call it when it comes to the Adani Group is of course India. It's Gujarat, to some extent, of course, I think also Delhi, though I think the whole country basically at this point. I was hoping that we could ask you to briefly tell us and remind us what's been happening with the Hindenburg report and how Adani and also the Indian government have reacted and responded to them.
Ravi Nair: So even before the Hindenburg report was published on 24 January, well, many journalists here in India kept pointing out many of these things, and if you look at the Hindenburg reports and if you followed these stories by the journalists here, most of the things you can see in the Hindenburg report, they have taken it further actually. So in a way, the Hindenburg report didn't say anything new, but they expanded on what was already there. It got more traction in the financial market, and that's exactly what happened.
What happened after was that the Adani Group denied all these allegations, but if you go through their 413-page reply to them, it was very generic and not specific to each and every allegation that the Hindenburg research raised. For example, if you look at the foreign portfolio investors named in the Hindenburg research report, Adani's reply just merely states that these are done as per the regulations. That's it, nothing else. In the case of Vinod Adani's links with various offshore entities related to the promoter group, the reply said that he has no holdings in the sense that he's not a director or a manager, he doesn't hold any position as such in the group. Then a few people filed a case in the Supreme Court. So the Supreme Court ordered SEBI to do an investigation into certain regulatory aspects. The report will probably be published next month, and submitted to the Supreme Court by next month. There are two aspects to it, the regulatory aspects and the political and economic aspects. If SEBI is doing an investigation, we have to go back. In July 2021, a Member of Parliament from an opposition party, Mahua Moitra, an investment banker turned politician, raised these questions in the Indian Parliament. The then minister of state for finance, in a written reply, said that SEBI is investigating the allegations raised against certain foreign portfolio investors parking money in only Adani Group companies and the directorate of revenue intelligence (that's the intelligence wing of the ministry of finance in India called DRI) is investigating allegations. The interesting thing is, what happened to those investigations after one and half years, nobody knows. SEBI is still investigating. So that is the current scenario.
Roman Gautam: I think that best case scenario, Hindenburg took some years to research as well. Maybe SEBI will do something similar, but who knows?
Ravi, if I could ask you also to rewind a little bit further because I know this is something that you've written on and looked at in the past, there is of course a deeper connection between the ruling government in India right now and the Adani Group going all the way back to Gujarat. I won't ask you to rehash the facts of that, but you've been watching the Adani Group for a long time. How would you describe how Adani's rise has taken place – the pace of growth recently, but also tracing the trajectory of the group from the early days in Gujarat from basically the start of this millennium to the present day?
Ravi Nair: If you look at India's current prime minister Narendra Modi's political growth trajectory and Adani Group's business trajectory, it goes equally parallel, upwards. So this started in 2001. The relationship was said to have started in the late 90s but it got stronger after the 2002 Gujarat riots. In a meeting when Modi visited Delhi to meet with two industrialists and asked them to invest in Gujarat, including Rahul Bajaj, a very well-known industrialist in India who passed away last year. So Rahul Bajaj questioned Modi saying that with social scenarios like the violence and riots and all, what kind of security and confidence will industrialists have and how can he guarantee that this will not take place again? Modi got upset and he walked off the stage and went back to Gujarat. Then a section of these industrialists from that body, which is the Confederation of Indian Industry (CII), broke away from the main body, led by Gujarati businessmen and they formed another body there in Gujarat. They conceived the idea of a vibrant Gujarat summit, the investment summit of the Gujarat government. Then, Gautam Adani was actively participating in that movement and that's how they got closer. From then onwards their relationship became stronger and stronger.
It was not the first time that allegations against the Adani Group were coming up. It happened in Gujarat, on so many occasions, but it was never investigated. It was just brushed under the carpet. Then what happened was, from 2002 to 2014, Adani's growth trajectory was limited because Narendra Modi was just a chief minister of one state. So in 2014, when Modi became the prime minister, the scenario changed because Modi was the leader of India, a big country. If you look closely, Adani's reach has started to widen.
Today, Adani holds almost 14 ports in India, seven airports and one is under construction. Adani holds private railway rigs, grain silos, coal mines, and mine development operations and is the largest private player in the power sector, the largest player in the renewable power sector, both traditional and renewable power sector. You name them, everywhere it's Adani. So this business expanded in the last eight, nine years after Modi became prime minister.
In 2014 after winning the election, Modi came into Delhi, and flown in as prime minister in Adani's private aircraft – that itself speaks volumes, right? There are photographs widely published across the media, and recently, the now-suspended Congress MP Rahul Gandhi showed that photograph in Parliament, asking about Adani's connection with Modi. So these questions were expunged from the parliamentary records and nobody bothered to answer.
Roman Gautam: Thank you, Ravi. Another thing that's been in the news on the Adani Group, the latest report I think was in Al Jazeera, where journalists uncovered documents that showed that there was a special consideration given to the Adani Group for a certain coal mine that was awarded to them. I think it must be acknowledged that there were other journalists, I think the Caravan among them, who had looked at that and broken other documents looking at that deal earlier on as well. The Adani Group has said that all contracts and deals awarded to it have followed due procedure. Now my question is, the previous government, before Modi and the BJP took power in Delhi, was hit pretty badly by a huge scandal when it came to the allocation of coal mining blocks to large corporations in India. For those of you not in the know, this was the infamous Coalgate scam. The Caravan among others showed that while the Supreme Court in India ruled against those deals and a lot of them were dissolved, Adani continued with the coal blocks that were awarded to the corporation.
So in some ways, there are parallels to be drawn between the relationship between large corporations and the government under the previous administration, and perhaps what is happening now. But what's your understanding? How much is Adani a reflection of problems that have been around for a while and are continuing, and how much is it really an exception in its equation with the Indian state and its recent growth?
Ravi Nair: Let's start with this Al Jazeera story. The Supreme Court order cancelled those coal allocations. So what happened was certain states like Rajasthan under the BJP government previously selected Adani Group as the Mine Development Operator (MDO) for these coal projects. When the allocation for these coal mines was cancelled, the MDO status of the Adani Group was not cancelled. It continued. So even if the coal mines are tendered again, Adani will remain the Mine Development Operator. That is a tricky thing and they played it very beautifully. It's good that journalists found this out.
This is not the first time. Another example is what happened in 2011-12, a group of activists alleged and filed a case with the National Green Tribunal (NGT) that the Mundra Port and Special Economic Zone (SEZ), the largest privately owned port in India and the second largest port. It's a very huge area in the economic zone. It violates environmental laws and creates ecological damage. The government formed a committee to study it. The expert committee submitted its report to NGT and the government, and it stated that with Adani, of course, there are a lot of violations and it should be penalised. So the penalty was a huge amount. After Modi came into power, Adani Group submitted a reply in 2016, that they did not violate any norms and everything is as per the rules. The government accepted the reply and got rid of this penalty.
Another example is linked to Bangladesh. There's a power project in the Indian state of Jharkhand, a place called Godda. When Modi, as the prime minister of India, went to Bangladesh for the first time in June 2015, both governments decided to take their economic cooperation further for the development of both these nations and they signed many agreements. Two MoUs were signed in which two private companies from India will invest in Bangladesh and develop two power projects, one is a gas-fired one, and another is a coal-fired one. So Anil Dhirubhai Ambani of the Reliance Group, signed an MoU for a gas-fired thermal power station, and Adani Power of the Adani Group signed an MoU to develop a coal-fired power station. Three months down the line, in August, Adani Group's MoU mysteriously changed and they signed a new MoU with the Bangladesh government. The MoU said that the Adani Group will build a coal-fired thermal power station at a suitable place in India and will export the power to Bangladesh. They found the location in Jharkhand, a place called Godda. The interesting thing is, for this project the coal will come from Adani's Australian coal mines, almost 8000 miles away, it will come by ship to a port in Orissa, and from there it will come by rail 592 kilometres by rail to the plant. Water will be drawn from the Ganga and the electricity will go to Bangladesh. This is a very unique project. For this land acquisition, there were a lot of protests because the area is one of the most backward areas in India and a lot of tribal communities and poor farmers were there. Their agricultural lands and ancestral lands were taken away from them forcefully. A lot of violence happened, many people were jailed and adequate compensation was not paid. The then Jharkhand government under BJP changed certain rules of the state.
In 2007, Adani signed the power purchase agreement with Bangladesh. In 2019, just before the announcement of the elections, the Modi government at the centre changed its own laws and gave the SEZ status for Adani's Godda project. That is why it is unique. There is no standalone power project declared as an SEZ in India, ever. So in SEZs, the tax laws are different. Actually, it's a country within a country with different tax laws. So, Adani doesn't have to pay any import duty for all the equipment that they have imported; they don't have to pay any tax on imported coal, and they don't have to pay even the environmental tax for using coal and creating pollution. They don't have to pay income tax for the first five years, and for the next five years they have to pay only 50 percent, and 10 to 15 years later if they make back their profit they don't have to pay income tax for that part.
In Jharkhand, it was mandatory that if a power plant is set up and the power is exported outside the state, it was mandatory that the power company should supply 25 percent of the produced electricity to the state at a cheaper level. That has been changed for Adani. In nutshell, the land was forcefully taken away from the farmers and tribal groups, and the state government and the central government changed laws to support Adani. The central government gave SEZ status to Adani's project. Adani will produce electricity, draw water from Ganga, and export it to Bangladesh and Adani will earn billions.
One more aspect to this is when we say that Adani will draw water from Ganga, as per the environmental report for this particular project that was initially submitted, it was said that the water will be drawn from a smaller river called Chiru and later, Adani changed this. Now, the water is drawn from some 90 kilometers away, through huge pipelines, from the Ganga. So a group of activists filed a petition in the Kolkata regional bench of the National Green Tribunal. The tribunal dismissed the petition citing two reasons. One, it is mandatory if anything happens like this, the petition should be filed within 30 days. The activists were delayed. Second, the NGT questioned the locus standi of the petitioner, who was a Delhi resident – how is it going to affect you if the water is drawn from the Ganga?
Once the source of water is changed then there should be another study. How is it going to affect the ecology? It was not submitted. It was not done. This is the second example.
Roman Gautam: Of course, Ravi, I think that there are so many examples, and thank you. I think that hearing about it in such detail, I think gives us a closer sense of how the levers and the gears of all of this turn in the Indian system. And also specifically in the case of Adani projects. And you were already speaking about Bangladesh and I'd like to maybe follow the power transmission lines across the border from Jharkhand across West Bengal and then into Bangladesh. Zia, of course, you've also studied the deal in Bangladesh in some detail. Of course, we will ask you to elaborate on that. But to start us off, I know that right now in Bangladesh, there's a controversy over the pricing of the deal between the Bangladesh company and the Adani Group on the Indian side. There are many questions being raised. Ravi, I know you've also written about this. But Zia, can I ask you to just summarise what the controversy and the questions are first, Ravi, if you want to throw in a little bit of this on top of what Zia says, please do.
Zia Hassan: First, thank you Roman for inviting me to this webinar. This controversy regarding Adani's deal with the Bangladesh Power Development Board has many layers and many phases. So right now, the phase that we are currently in is that Adani has already started supplying the power. The main concern for Bangladeshi people is the rate of this Adani power that Bangladesh is importing from India is actually three times more than other deals Bangladesh has with other companies in India. Bangladesh actually buys power from one state-owned power enterprise, National Thermal Power Corporation (NTPC) as well.
Now the question comes to what kind of deal the Bangladesh government has with Adani and why would this cost three times more than the other deals Bangladesh has with India. Bangladesh is currently going through a financial crisis and now we have to pay, every year, more than one billion dollars to Adani. If Bangladesh does not take any power from Adani, because for example, we find that deal expensive, so we maintain the contract but only pay the capacity charge. The capacity charge is somewhere around 400 million. And on top of that, there are clauses in the deal that says that if Bangladesh does not take any power, it has to pay the minimum cost of 33 or 32 percent of the input cost. So with all these things together, there is secrecy and there is not a lot of transparency. How much will it cost Bangladesh if it takes the full power of that 1600 megawatts, and how much if Bangladesh decides not to take the power and only pay the capacity charge? But the rough figure that we have calculated, is because they have not published the deal openly, if we take the full power it's going to be somewhere around 1.2 billion dollars. And if it doesn't, the cost will be somewhere around 600 million dollars. Both of these figures will be a stress on Bangladesh's reserve.
Roman Gautam: Thank you, Zia. Looking at this from two different parts of the border and also seeing two different governments, I think is extremely interesting. Zia, you've written in the past that the deal suggests that the Modi government thinks that the Sheikh Hasina government is beholden to it in particular ways. Can you tell us a little bit about that, please, and then I'll bring things back to some of your own analysis of the deal?
Zia Hassan: I would like to thank Ravi because we have followed what Adani Watch has published and that has contributed to our discourse. Interestingly, what the broader Indian and also global discourse about Adani's deal with Bangladesh hides is the fact that the deal actually is a result of something that happened in 2014. In the 2014 Bangladesh elections, the Indian Foreign Secretary Shujaat Asim played a very critical role in making sure that election is projected in a way that lends legitimacy to the Awami League. That was the time when Congress was in power. And Sheikh Hasina, despite all the limitations she has, always made sure that the parties or the entities that had given her maximum backing in the critical time were rewarded. When Modi visited in 2015, two deals were signed. We still are not talking about Reliance – they have done another massively bad deal for Bangladesh for which we are going to suffer. In that deal with Reliance and Adani, it was decided that both companies will invest to develop the Bangladesh power sector, which was actually welcomed by all the parties in Bangladesh because Bangladesh needs investment.
In Bangladesh, there was not a lot of discussion until this February when it came to light that this Adani deal will cost per unit, 21 takas, which is three times what Bangladesh is paying for other companies in India. Then it became a big story. Then coincidentally, at that time the Hindenburg report came out, and then the Bangladesh issue got international prominence and Indian media picked it up.
Roman Gautam: Of course, and I think Adani disputes the figures that have been reported. And also I know that in Bangladesh, there are questions being raised about Bangladesh possibly seeking to renegotiate the terms of this deal, which is also something that Adani denies. So, Zia, I did want to go back to the deal itself because I know you've also done some analysis where you've also taken up, I think a unique and very interesting angle to this where you've said that, there are the comparisons between other deals for power across borders that Bangladesh has signed. But you were saying that nobody has really looked at the alternative to coal power as a whole, not just Adani, but to look at green power, which India or Indian green power firms have been saying that they have a surplus to sell. But that doesn't seem to be on the table at all. And you were saying that that constitutes an even bigger disadvantage to Bangladesh when you do that comparison. Could you walk us through that a little bit, please?
Zia Hassan: Yes, that's a very important and interesting aspect that I would say the Bangladeshi media has also missed out. I would say that a lot of this discussion initially started with the report done by the Institute for Energy Economics and Financial Analysis carried out in 2018. Tim Buckley from Australia showed in that very elaborate report that at the time Bangladesh carried out the deal with Adani, the Indian Association of Renewable Energy Agencies of States was asking to lobby to sell their excess powers to Indian neighbours. And who is the Indian neighbour that has the highest amount of energy needs, and who is the Indian neighbor that has a good connection with the Indian authorities? That would be Bangladesh. Tim Buckley argued that Bangladesh could have easily taken advantage of the falling alternative energy prices that are now available in India, and that's why Bangladesh didn't need to carry out this contract. At least not for 25 years, because India is slowly becoming an energy surplus nation, especially when it comes to renewable energies.
Another critical thing is that that power would have cost around 2.2 rupees and there would be no inflation. His point was that Bangladesh didn't really need to buy power from Adani because we have base road capacity from our sitting diesel power and also gas power stations. So Bangladesh should have avoided getting into this very expensive deal. Instead, Bangladesh should have procured the renewable energy deals which Indian renewable energy owners were very keen on. When I interviewed Tim Buckley last month, I asked, why didn't Bangladesh do that? He said the deal was already done between Sheikh Hasina, Adani, and Narendra Modi. So they were not given the chance to even offer their deals.
So Bangladesh didn't need to sign this deal. Back in 2017, it was very clear, the unutilised power capacity of Bangladesh had reached 50 percent plus when the deal was signed. So, Bangladesh actually didn't need to sign that.
Roman Gautam: Absolutely. Thank you, Zia, Now, I want to take us on a reverse journey along the power lines, I would estimate roughly a thousand kilometres back into Jharkhand, from Jharkhand another thousand kilometres back to the Indian coast, and from there many thousands of kilometres over to Australia, where we have Rawan Arraf.
Rawan, I want to start by acknowledging the many Myanmar activists and journalists, and others that you have worked with, of course, the situation in Myanmar is such that a lot of them cannot be out in open, in public, putting their names to the work that they've done and also speaking out about what's happening in the country. But we are very grateful that we have you instead. Of course, you've worked with a lot of activists and others in Myanmar to put out the information that you did.
I want to very quickly say to everyone else in the session that Adani's involvement in Myanmar is a port in Yangon, which is being constructed in partnership with a military-linked company. The group, Justice For Myanmar, in partnership with Rawan, put out a report about this and about Adani's links both to the current military regime and to this specific project. Rawan, if you could tell us, please, in a bit more detail about the project and also what's happened since the report was published?
Rawan Arraf: Yes, thank you so much, Roman. It's a real pleasure to be on this panel. I should state at the outset that I myself am not an Adani observer, and I really respect people like Ravi, Zia and everyone else in India and across the region, for really taking on such a very powerful corporation and holding it to account. Thank you also for paying respect to the activists in Myanmar. Our very brilliant partner organisation, Justice For Myanmar, has really been so pivotal to exposing Adani's links in Myanmar, and we were very fortunate to work with them. I should state at the outset also that the Australian Centre for International Justice (ACIJ) is a legal centre, we work with community organisations, diaspora groups, community groups, and other partner organisations to provide accountability, expose wrongdoings and work with these communities to find remedies for international crimes, which we would define as genocide, crimes against humanity, war crimes.
And so we came to this really after the campaign against the Rohingya ethnic and religious community in Myanmar. The Rohingya, in 2017, as your audience might know, were exposed to a genocidal campaign from the Myanmar military, and so that set off ongoing accountability processes in the UN. One of them was the fact-finding mission, which was the first one that really popularised, in the human rights community which I would consider myself to be a part of, Adani's links in Myanmar. So that's where I first heard about what Adani was doing in Myanmar. And I was interested, obviously, being an Australian and the unpopularity of the Adani Group in Australia because of its Carmichael project.
I'll just go through a bit of a chronology about this relationship with Adani Ports and the Myanmar Economic Corporation (MEC), and try and bring you up to speed about what's happened since the relationship, and all of their announcements since then. In May 2019, Adani Ports and Special Economic Zones, which we'll call Adani Ports, entered into a build-operate-transfer (BOT) contract with the Myanmar Economic Corporation to build a commercial international port in Yangon. And in the process, it would lease land held by the MEC for 15 years. Now, MEC is a military holding company, owned and controlled by the Myanmar military. As a part of the process and in the establishment of this contract, Adani Ports committed to investing 290 million USD for the entire project. And the contract itself was entered into less than two years after the military's ethnic cleansing campaign against the Rohingya, which is widely considered to be a genocidal campaign. And also less than a year after the UN fact-finding mission warned foreign corporations from engaging with the Myanmar military's two conglomerates, that's MEC and Myanmar Economic Holding Ltd (MEHL).
In August 2018, the UN fact-finding mission, which was established by the United Nations Human Rights Council, listed Adani as one of the 58 foreign corporations that had entered into or maintained commercial ties with either of these two companies. So this deal is obviously very bad for many reasons, but more because foreign investment in Myanmar facilitates endemic corruption and it allows the military to channel crucial funds, that should be used for the public, to itself. And so the military, as we know, led a violent coup just over two years ago on 1 February 2021, toppling a democratically elected civilian government. And the coup, as you've stated, has resulted in mass repression across the entire country and ongoing atrocities, ongoing war crimes, and crimes against humanity. Put simply, as one United Nations fact-finding mission member (Australia) Chris Sidoti said, any deal with these companies puts funds directly into the military, and that's the bottom line.
So we released our report on 30 March 2021 and it published leaked documents that were obtained by the wonderful folks at Justice For Myanmar, which revealed for the first time the amount that was paid by Adani Ports to the MEC. It was a total of 52 million USD of land lease fees and clearance fees. And one thing that we've always been interested in, I think there was, in addition to the 30 million USD of a land lease fee, there was a land clearance fee of 22 million USD. We don't know who the recipient of this is, we expect that it would be MEC, but it seems like somebody that doesn't really understand the building or construction of ports. But 22 million USD for land clearance fees seems like a very exuberant amount and so I think there should be questions raised about this amount in general, and the potential of whether there are any kickbacks within that fee itself. I think that was always a question that we were never able to answer. So if the journalists listening in, if they can chase that, that would be really fascinating to know.
Adani Ports has always stated that its contract with the MEC has always been maintained with due diligence, but it's never released these reports. Of course, Adani Group is not known for its transparency, we've called on Adani Ports to release these due diligence reports which they say they've conducted, but they've never released. And I think also the United Nations fact-finding mission requested that they release it, but we've never heard about that.
So our report also interestingly published photos of the Adani Ports CEO, Karan Adani, exchanging gifts with the commander in chief of the Myanmar military, Senior General Min Aung Hlaing, in a tour of the Mundra Port in India in July 2019. It's important to note that at the time of his visit, the senior general was barred from visiting the United States because of the atrocities against the Rohingya minority, and subsequently there were further targeted sanctions and financial sanctions against the senior general. It's important also to note that the Adani Group never responded to the United Nations fact-finding mission when it publicly listed them as one of those foreign corporations involved with the military corporations.
In February 2021, so this was quite interesting, it was just before we released our report, Adani Ports responded to the Business and Human Rights Centre, that's an online portal that researches business and human rights issues around the world, stating that we categorically deny having engaged with the military leadership while receiving the approval all thereafter. But of course, we published these photos, which were already available online. Min Aung Hlaing had them on the military's website and on their social media, it only just took us finding them for us to release them. I mean, it was really laughable and I think it's insulting that Adani thinks it can mislead people in such an apparent fashion. It's probably something that's happened in the past and your guests might know about this, but for me, as somebody who came quite recently to look into Adani, I just thought this was really, really insulting to our intelligence that they would make such an outright denial when there was photographic and video evidence that clearly showed Adani Ports CEO, Karan Adani, giving Min Aung Hlaing gifts and touring the Mundra Port with them.
Interestingly, also in February, so again just before our report was released, there was an earnings conference call, and this was a few months after the February coup, and there were questions about Adani Ports' contract in Myanmar. Karan Adani essentially stated that it was business as usual, the port was in full swing, he said, and they expected the terminal to be commissioned by April 2021. Then there was a follow-up question to him about whether the contract was rock solid, irrespective of the political situation there. And Adani says, yes, that is there. So this exchange, I think, reflects that Adani Ports' overriding preoccupation was with the port build, not the catastrophic situation of the coup, and that their business partner was now running the country. So all of these subsequent flowery statements that Adani Ports had about "we respect human rights" and all of this stuff, I think flies in the face of this very important conversation that they did not care. They cared about the fact that the port was continuing to be built, remembering that it was a few months after the coup and the very devastating human rights situation that was facing Myanmar.
So after the release of our report, which as I've just detailed, leaked those documents showing the land lease fees that were paid and also those photos, which again, I state was not something that was broken by us in a way, we just put it all together and analysed it. And they issued a statement and so the statement, I think, became very typical of what we are used to from Adani, obfuscation, dishonesty, crafty and in genuine language, about their so-called respect for human rights and that this project is benefiting the people of Myanmar. They never commented on the land lease payments that we detailed in our report. And the obfuscation was in the way that it tried to suggest that the port project was facilitated by this other agency, the Myanmar Investment Commission (MIC). The commission only regulates investment, but it's the business deal itself, which is a direct business with MEC, which they didn't acknowledge at all in this statement, following the release of our report. In fact, the word Myanmar Economic Corporation suddenly disappeared from all of their statements subsequent to the release of the report. So again, failing to acknowledge this direct business, when previously they had.
And so in April 2021, what we had was a few human rights groups and environmental groups got together and put in a case to the Dow Jones Sustainability Index, a case for review they called it, and Adani Ports was taken off the Dow Jones Sustainability Index. So this was the kind of impact that we saw starting to happen following the release of the report. Now in May 2021 came the news, I think it was first published in Reuters, they were reporting on an investor document that Adani stated that, if it was found to be in violation of US sanctions, it will exit Myanmar. It said, in a scenario wherein Myanmar is classified as a sanctioned country under the Office of Foreign Assets Control (OFAC) in the US if it applies that the project violates the current sanctions, Adani Ports plans to abandon the project and write down the investment. And so OFAC is the office within the US Treasury Department that administers the country's economic and trade sanctions. And this is the beginning of another line of reasoning that Adani Ports had subsequent to the release of the report, and it became about the issue of sanctions. So it didn't need a determination from the US OFAC that it was in violation of sanctions. Regardless of whether there were sanctions or not, it should disengage responsibly and comply with its human rights obligations. For example, in October 2020, the global shipping giant, Maersk, ended its use of the military-owned ports in Yangon in Myanmar because they recognise the real human rights risks and potential complicity of continuing to use those ports. So this global shipping company did announce disengagement with the military ports in 2020. So before the coup but after the release of the UN fact-finding Mission reports.
In June 2021, we have an annual investor summit, and Adani Ports disclosed that in actual fact they had paid 19 million USD in land lease payments to MEC. That's the first time that we saw confirmation of a different sum. And in the Indian Q1 financial year 2022, Adani Ports stated that it believes that it is not in violation of any sanctions guidelines issued by the US or OFAC, and has therefore applied to OFAC for a general license to operate the port. So I think that indicated a real concern that there is a potential sanctions breach, which is something that we were saying in our report, that it could very well be in breach of US, European, Canadian, and subsequently Australian sanctions if it continued to engage and build this port.
In August 2021, what we did with Justice For Myanmar was write to the US Treasury, urging them to reject any requests from Adani Ports for this general license and to be exempt from US sanctions on MEC. We didn't receive a response. But what happened was, in October 2021, Adani Ports stated that it was planning to exit its investment in Myanmar by June 2022. So this has not happened and I think the latest is that it's stated that it's failing to find a buyer. What I want to say here is that it says that it's in the process of pulling out but it's still in Myanmar right now developing the port. And this is not a responsible exit. Again, more obfuscation and vagaries from Adani Ports about what it's doing in Myanmar.
I should also mention that in March 2022, Norway's Sovereign Wealth Fund, the largest sovereign wealth fund in the world, also didn't believe that Adani was serious. They had serious doubts about its announcement to withdraw from Myanmar. And last month actually, they divested from all Adani Group companies. They never put out a statement about why, but they just don't have any investments in Adani Group companies anymore. It could also be a result of the report, I'm not sure.
One thing I wanted to state is that there was a question, I think about what is the Indian government's relationship with Adani and the project in Myanmar. An important point is that the infamous Min Aung Hlaing visit, which of course Adani tried to deny exists, occurred in the context of actually an official state visit to India. Until recently, the president of the India Myanmar Chamber of Commerce was Sunil Seth, who is the chief executive of an Adani subsidiary in Myanmar and a key person involved in the business dealings and commercial dealings there. The Indian ambassador to Myanmar is the patron of this chamber of commerce, and the chamber of commerce's office recently opened the Indian Centre in Myanmar, which was inaugurated by India's Foreign Secretary in a December 2021 trip, which unfortunately also legitimised the junta.
Finally, Adani Ports refers to the Look East policy of the Indian government in relation to this port investment. Justice For Myanmar also recently put out a report about the Indian government continuing to approve licenses to sell arms to the junta. That's a very problematic link.
Roman Gautam: Thank you so much, Rawan.
Rathindra, maybe I can ask you to start by just describing the three Adani projects in Sri Lanka, because the other countries we've looked at, it's one project each with Adani, so far. Sri Lanka has a slightly greater variety. If you could just maybe help our audience by telling them what those are.
Rathindra Kuruwita: For Sri Lanka, there are three different projects, mainly with port development and renewable energy. Adani actually came to Sri Lanka right at the beginning of our economic crisis. In 2019, we elect Gotabaya Rajapaksa, and within the year everything collapsed. And we have been demanding various governments and international communities to help us out. And actually, it's only India who stepped in. They gave us about 4 billion dollars worth of financing. I think that kind of saved lives and there's a lot of appreciation in Sri Lanka for what they did. Then what the Modi government did was use that appreciation and that leverage to help Adani come in.
Renewable energy is really important to Sri Lanka, because we currently spend a lot of money generating electricity through diesel and coal. I think we spend close to 1.5 billion, 1.6 billion rupees on coal and diesel, each year. And given that our current balance of payments and our foreign reserves are really low, this is a really big number. And for decades, various environmental and civil society organisations, and academics, have been saying the future for us should be renewables because they are cheaper, they are cleaner and they are less susceptible to global energy market fluctuations. But we have not done anything. In fact, we have done a lot to discourage local renewable energy producers from adding to the national grid. Our Electricity Act does not facilitate renewables.
When Adani comes into the picture in 2022 and it was announced that there was an MoU signed between Adani and Sri Lanka to develop two wind power plants in Punarin and Mannar, both in northern Sri Lanka. And within a few months, we changed our Electricity Act. Earlier, if you are going to build a power plant or a power project, you need to go through competitive bidding. But that was changed. There's no need for competitive bidding anymore. But what you have to realise is that, at this time, from February to June, Sri Lanka was going through a massive economic crisis, fuel queues, power cuts, gas shortages, and public attention was quite dispersed. There wasn't enough attention given to what Adani was doing. Even when we were changing the Electricity Act, there were discussions in Parliament, but they timed it so well that public attention was not really there.
Around the same time, our former head of the Ceylon Electricity Board went before the Parliament committee, and he said Sri Lanka gave these power projects to Adani because of the pressure exerted by Modi's government. And within the day, Gotabaya Rajapaksa and Adani both rejected it and the chairman resigned.
Another point is, at this time Sri Lankan politicians are denying that these are government-to-government projects, they are denying that there was much pressure from the Modi government. They were trying to portray this as a purely commercial deal. Adani says they want to help Sri Lanka and be good neighbours, thinking about our best interests and the people's interests. Unlike what Ravi and Zia have mentioned, we really don't have too much information about these agreements. One thing we do know is that we are going to pay 7.55 cents per each electricity unit that we buy from Adani. And that's about twice the rate we would have paid if we had gone for competitive bidding. And we have to pay in dollars. We have a balance of payment issue and a foreign revenue crisis, and we are going to pay Adani in dollars. This is not going to work out well for us at all.
The other controversy is port development. Adani comes into the picture with no competition, no due process, and no transparency at all. So again, in 2021 January, Gotabaya Rajapaksa announces that he was going to offer a 49 percent stake in the East Container Terminal (ECT) of the Colombo Port to Adani. This was about a week after Jaishankar came to Sri Lanka. And earlier, they had planned to go with the private partner and go through a competitive and open bidding process.
At the time, our economic crisis was not too bad, so people had time to protest and take steps. So there was a lot of pushback from trade unions, political parties, civil society organisations, environmentalists, and journalists, for Gotabaya to take a step back. But he gave the best container terminal to Adani with no competitive bidding and paved the way for Adani to invest in our strategic sectors without any competition. The new government's whole plan is to privatise state assets and all the deals with Adani and other companies are justified on the grounds that the state should not do business. And they are simply going to dish out to companies like Adani, no questions asked.
Ravi Nair: I'll add one more thing to this story. I have done a long story on this port and we were able to access two cabinet memorandums related to this port. One was by the then minister of ports, Justin Fernando, which clearly stated, Adani will develop this port as recommended by India. It's a government-to-government deal. In the second one, it stayed the same and they gave a detailed description of Adani Group and its business activities in India. The second one was in October 2020, it was signed by then-port minister Rohitha Abeygunawardena. So both these things clearly state "as recommended by the government of India." So now it raises another question. It's a government-to-government deal. Who is Adani for the Modi government to recommend this particular group as India's official representative for a strategic project? What is the Adani Group? Is it India's official representative?
I interviewed, on the record, the then Sri Lankan port authority chairman, General Daya Ratnayake, and he said that India officially recommended it. It's on the record. He said that the Modi government officially recommended the name of the Adani Group as India's official representative to develop this port terminal. The unions were so strong in their protest that they had to cancel the Eastern Container Terminal that was first proposed. Interestingly, Eastern Container Terminal was almost partially operational and almost 40 percent constructed. And the union said that just hand over to us, if the government doesn't have money, and we will develop and operate. The government has to give us some support. That's it. But without any tender, this has been given to the Adani Group. And it wasn't Adani Group alone, It was a consortium with John Keells, and the Sri Lanka Port Authority (SLPA) will be the minority state holder. Adani will be the majority state holder. That didn't work. Even though Rajapaksa has been pushed back by the unions and opposition parties at that time, the Western Container Terminal was handed out to Adani. The difference is that the Eastern Container Terminal was almost 40 percent constructed and partially operational, this one, they had to invest more money to develop from scratch. So after Hindenburg reports findings, the banks are skeptical about funding, how this is going to affect them, how the group is going to invest money into that, and how the construction is going to progress.
Roman Gautam: Just something to point out as well, as part of Adani's reaction to the Hindenburg report, of course, was saying that the Hindenburg report amounted to an attack on India. So if we can simplify Adani equals India and India equals Adani, of course, that's an interesting position for a private corporation to take, to begin with. I think it is also very interesting to point out that the Indian government did nothing to distance itself from that statement or from any of the statements coming out of Sri Lanka, where these are being characterised as government-to-government deals. I think the Indian government has also been puzzlingly silent when it is being dragged into territory that perhaps it would not naturally belong to, let's say.