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 eases the country’s severe power shortages.
India’s thermal coal imports hit a monthly record in June of 20.9 million tonnes, after Prime Minister Narendra Modi’s government called for an increase in purchases to address fuel shortages at domestic power plants.
Adani Enterprises, the country’s largest coal trader, more than doubled its market share in June from last year to produce 7.3 million tonnes, according to market data firm CoalMint. Adani Power, the country’s largest private power company, increased its coal imports to 1.4 million tonnes in June from 154,000 tonnes a year earlier.
Together, Adani’s subsidiaries accounted for 35 percent of India’s coal imports from April to June this year, reflecting the growing dominance of the country’s infrastructure. The share from June 2021 to June 2022 is 30 percent.
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 generation and transmission. Analysts say his vertically integrated empire is well-positioned to benefit from record coal prices.
“Hyperinflation in energy means more profit for the Adani Group,” said Tim Buckley, an energy economist and founder of Climate Energy Finance Australasia, because he “got many bites of the big cherry”.
The Adani group had been growing rapidly before New Delhi intervened to prevent a painful shutdown.
Adani Ports reported earnings before interest, taxation, depreciation and amortization for the year to March of Rs91.2bn ($1.1bn), an increase of 21 per cent 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 March, increasing 58 percent year on year to 27.7 million tons, and is set to expand further after the company won bids for two commercial coal mines.
Adani Power trebled its year-on-year profit after tax for the year ending March to Rs49.1bn. A massive Rs59bn one-off payment from the indebted state electricity distributor throughout the year also supported profits.
“Adani is one of the prominent beneficiaries of the ongoing coal shortage in India,” said Sunil Dahiya, an analyst at the New Delhi-Based Center for Research on Energy and Clean Air think-tank.
Adani has also benefited from changes in government regulations, after New Delhi ordered a greater share of coal supply from imports and changed the rules to allow electricity companies to pass on rising costs to consumers.
“Our nation’s domestic production cannot sustain the growing demand,” Adani Group said in a statement. It added that coal prices are “driven entirely by market forces.”
Adani first appeared as the lowest bidder for the unprecedented maiden coal import tender by state-owned Coal India, which has been ordered by the government. However, the contract was not ultimately awarded.
As well as mining in India, Adani operates private mines in Indonesia, the source of its coal imports. The group has also recently started shipping coal from Australia’s controversial Carmichael mine.
Steep energy import costs helped push India’s current account deficit to a record $25.6bn in June. Coal-related imports are the second-highest currency earner after oil products, the Trade Ministry said this month, rising 242 per cent year-on-year to $6.4bn.
Modi has made energy security a priority, focusing on improving coal mining and developing renewable energy sources. He committed to the “lower phase” of coal use at the COP26 climate conference last year.
Along with being the country’s largest operator of coal-fired power plants, Adani is one of the biggest players in India’s renewable drive. The 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