Electric Companies Duping Indian Consumers: DRI Investigates a 29,000 Crores Rupees Scam

Six companies from the Adani group, Anil Ambanis companies as those belonging to Jindal Essar among a total of 40 corporations –that include state electricity corporations –are allegedly involved in a massive scam that has de-frauded the Indian consumer into paying one and a half times for electricity suggesting that senior functionaries within government are also in the know


Video Courtesy: Newsclick.in
 
Editor Economic & Political Weekly, Prananjoy Guha Thakurta speaks to Newsclick on a massive financial fraud –at least to the tune of Rs 29,000 crores –being currently investigated by the Drectorate of Revenue Intelligence (DRI). Thakurta broke the story in EPW on April 2, 2016.

There appears to be a major scam involving some of India’s mightiest companies like Adani Group and Anil Dhirubhai Ambani Group and forty of India’s biggest energy companies. This is currently under the Directorate of Revenue Intelligence (DRI) scanner. Conservative estimates put the amount involved at nor less that Rs. 29,000 crores, which then is passed onto the electricity consumer in the form of higher power tariffs. 

What was the exact modus operandi of these companies? What did the companies actually do to inflate the price of coal that they were importing? How did this scam come to light? To discuss and to know more about these issues Newsclick interviewed Editor, Economic & Political Weekly, Paranjoy Guha Thakurta, who exposed the scam. 

In EPW, Thakurta says, “Among the private companies being investigated, the best known names include at least six firms belonging to the Adani group—Adani Enterprises Ltd, Adani Power Ltd, Adani Power Rajasthan Ltd, Adani Power Maharashtra Ltd, Adani Wilmar Ltd and Vyom Trade Link. The Adani group is headed by Gautam Adani who is known to be close to Prime Minister Narendra Modi. The group has supplied coal to various power generation and distribution companies, including Tamil Nadu Electricity Board, Gujarat State Electricity Corporation, Haryana Power Generation Corporation and Jhajjar Power Ltd.

“Other privately-controlled companies in the list of firms being probed by the DRI include Reliance Infrastructure Ltd and Rosa Power Supply Co Ltd, both of which are part of Anil Dhirubhai Ambani Group (ADAG) led by Anil Ambani; two companies in the Essar group promoted by the Ruia family, Essar Oil Ltd and Essar Power Gujarat Ltd; JSW Steel Ltd headed by Sajjan Jindal; four companies in the Hyderabad-based NSL group (NSL Sugar, NSL Krishnaveni Sugar, NSL Sugar Tungabhadra and NSL Textiles) promoted by M Venkataramaiah and M Prabhakar Rao; India Cements Ltd led by former International Cricket Council chairman N Srinivasan; and Uttam Galwa Steels Ltd led by Rajinder Miglani.

The list also includes Gupta Coal India Ltd; MBG Commodities Pvt Ltd; Knowledge Infrastructure Systems Pvt Ltd; three companies in the Bhatia group, Bhatia Global Trading, Bhatia International (Asia Natural Resource), Bhatia Industry and Infrastructure (Hemang Resources); two companies in the Gandhar group, Gandhar Oil and Refinery India Ltd and Gandhar Coal and Mines; Coastal Energy Ltd; Aggarwal Coal Ltd; Suryadev Alloys and Power Pvt Ltd; Laxmi Organic Industries Ltd; Phoenix Comtrade Pvt Ltd; and Simhapuri Energy Ltd.

Government-owned companies being investigated include the country's largest power producer NTPC Ltd (formerly National Thermal Power Corporation Limited), MMTC Ltd (formerly Metals and Minerals Trading Corporation Limited), MSTC Ltd (formerly Metal Scrap Trading Corporation Limited) and Karnataka Power Corporation Limited.

The DRI has monitored the details of coal imports of these companies till 31 March 2016, information accessed by the authors suggests.

Web of Scams
This revelation comes weeks after the DRI secured the first arrest of an accused person who was allegedly involved in over-invoicing of coal imported from Indonesia. On 27 February 2016, the DRI arrested Manoj Kumar Garg, a Hong Kong based Indian national who had allegedly opened a front company in Dubai responsible for over-valuing imported coal to the tune of Rs 280 crore. The coal was meant for the state electricity boards in Tamil Nadu and Karnataka.”

In this interview, Thakurta explains how some corporate giants, especially close to the political establishment in Delhi have carried out this scam by actually over-invoicing the price of coal being imported. Over-invoicing meant actually charging, on paper 40-50 per cent more than what was paid to the coal suppliers; this burden was passed on to the ordinary Indian consumer while the companies involved in these massive illegalities actually transferred the amounts illegally to foreign accounts.

This is a huge fraud on the ordinary user of electricity. In these 40 companies apart from some major private players close to the Modi establishment are also the Electricity Boards of Tamil Nadu, Gujarat and Haryana.

It remains to be seen how the central agencies –under the union finance ministry—and then the Reserve Bank of India (RBI) and the SEBI deal with this massive scam before the courts come into the picture.

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