Has Bengal govt backed out of Adani deal in port development project?

Adani Group chairman Gautam Adani was the centre of attraction in last year’s Bengal Global Business Summit, the annual flagship event of the state government held to attract investments.

However, in this year's edition of the grand event, which commenced in Kolkata on Tuesday (November 21), Adani was not just conspicuous by his absence. There are strong indications as well that the group has exited from a major infrastructure development project in the state, triggering speculations about politics prevailing over economic interests.

Speculation about the group’s exit was triggered after Chief Minister Mamata Banerjee made a surprise call at the event to all the business delegates to participate in the tendering process to develop a deep-sea port at Tajpur in East Midnapore district.

Adani deal

The announcement assumed significance since the state government had in October last year handed over a letter of intent (LoI) to the Adani Ports and Special Economic Zone Limited (APSEZ) for setting up of the port with an investment of ₹25,000 crore.

The LoI was handed over to the group after the APSEZ emerged as the highest bidder, piping JSW Infrastructure, in the tender floated in March last year.

The deal, however, has ostensibly fallen through as both the parties – the Mamata Banerjee-led Trinamool Congress government and the Adani Group – seemed to have had second thoughts.

The clearance the Centre gave for the project had clause(s) that the state government felt was “favouring” the Adani group, cited government sources as one of the reasons for the deal not progressing further. They however refused to elaborate.

The state government is yet to clear the air on the future of the deal with the APSEZ. Officials are tight-lipped about any development.

Uneasy over Hindenburg report

When contacted by The Federal, the group head, corporate communication of the Adani Group, Varsha Chainani said, “We are issuing a note shortly.” (We will update the story once the note is issued.)

Meanwhile, government sources have revealed the state government was uneasy about getting Adani involved in one of its most ambitious infrastructure projects, after the Hindenburg Research report in January this year accused the Adani Group of accounting fraud, stock manipulation and money laundering. The group, however, refuted the allegations calling it an “attack on India”.

The report has been used by the Opposition parties to mount attacks on the Narendra Modi government accusing it of favouring crony capitalists like Adani.

The TMC being a major constituent of the Opposition’s INDIA bloc had gone quiet on its deal with the group in the state in a bid to maintain a safe distance.

There was no mention about the port project in the state’s annual budget presented in February as well. Without naming Adani, Mamata Banerjee attacked the billionaire as adaar byapari (‘ginger trader’ or a small-time trader) just a few days after Congress leader Adhir Chowdhury questioned her silence on the Hindenburg report.

In the wake of controversy surrounding charges that TMC MP Mahua Moitra accepted “bribes” to ask questions in the Parliament against the Adani Group, the TMC maintained a stoic silence, insisting that Moitra could fight her own battles.

However, after the parliamentary Ethic Committee recommended her expulsion, the party gave her an important role in the organisation, making her president of the Krisnanagar district unit.

Impact on investment-starved Bengal

“Crony capitalism and charges against Adani are going to be major issues during the campaigning for the next year’s parliamentary elections. The continuation of the Adani Group in the port project would have been a sour point for the TMC in particular,” pointed out a political commentator Nirmalya Banerjee.

For an investment-starved state like Bengal, the possible departure of the Adani group could have an adverse impact as a fresh tender would only delay the project. “It might not be very easy to get another investor soon,” pointed out a state-based industrialist, who refused to be identified.