How Adani profited from government coal import order that raised electricity prices across India

The 10% mandate required all thermal power-producing companies in India to import coal equal to one-tenth of their requirements. The Union power ministry issued the direction in May 2022, citing domestic coal shortages. It mattered because most Indian thermal plants normally rely on domestically mined coal, while only some coastal stations are designed mainly for imported fuel.

The order covered both state-owned and privately owned power companies. Internal correspondence shows that Uttar Pradesh and Telangana objected because imported coal was expensive. Several private producers cited technical reasons for avoiding imports. The ministry nevertheless warned that companies missing their import targets could lose 5% of their domestic coal allocation.

The mandate therefore shifted part of India’s power system toward costlier international coal during a price surge. It was not simply a commercial choice by individual generators. It was a government-directed requirement, with penalties linked to access to domestic coal.

Adani Enterprises made money by acting as a coal importer and supplier for power generators, especially government-owned NTPC. Its contracts covered imported coal and included a fixed profit margin above prevailing coal prices and freight charges. That structure protected the supplier’s margin while allowing its total profit to grow as shipment volumes increased.

NTPC’s tenders guaranteed Adani Enterprises a set margin over the coal’s market price and transportation cost. When international coal prices surged, the contracts still preserved that additional margin on every delivery. The company also handled much larger volumes after the government directed thermal generators to import 10% of their needs.

The result was a sharp expansion in the business. Adani Enterprises reported coal-import revenue of Rs 99,486 crore in 2022-’23, double the previous year’s figure. The cost was ultimately passed through the electricity system, increasing fuel expenses borne by consumers.

Adani Enterprises played the dominant role in the NTPC coal-import tenders examined by Scroll. NTPC commissioned 31 tenders for importing 30.16 million tonnes between December 2021 and April 2024. Adani Enterprises won 24 of those tenders, leaving seven for Adi Tradelink, another Ahmedabad-based business group.

The scale mattered because NTPC is India’s biggest government-owned company in the power sector and operates under the Union power ministry. The contracts gave both suppliers a fixed profit margin above prevailing coal prices and freight charges. As international prices rose, the guaranteed margin applied to every shipment, while the large tender volumes multiplied the business opportunity.

Adani Enterprises’ coal-import division generated Rs 99,486 crore in revenue during 2022-’23. That was a two-fold increase from the previous year. More than 70% of the firm’s annual turnover came from coal imports, showing how central the government-directed demand became to its business.

The government’s stated reason was a domestic coal shortage. Internal correspondence shows that stocks at thermal power stations continuously declined from July to September 2021 and reached extremely critical levels in October. The ministry linked the problem partly to monsoon disruptions in coal supply and transport, alongside rising electricity demand.

That concern led the power ministry to require thermal generators to import 10% of their coal needs in May 2022. The decision came while international coal prices were 131% higher than a year earlier. Uttar Pradesh and Telangana warned that expensive imports would damage state finances, and private producers cited technical objections. The ministry still threatened a 5% cut in domestic coal allocation for missed targets.

The mandate therefore prioritized fuel availability over the objections and price risks raised by companies and states. It also created substantial commercial demand for import suppliers. The article records the supply concerns, but does not describe a separate government compensation plan for the higher import cost.

Imported coal was more expensive, so higher fuel costs moved through the electricity supply chain. The Uttar Pradesh energy minister warned that imports could increase electricity tariffs by 75 paise to 80 paise per unit. The Union power minister replied that the increase would be limited to 50 paise to 60 paise per unit.

The mechanism was straightforward: power producers paid more for imported fuel, and those higher generation or purchase costs fed into the cost of electricity. NTPC’s import contracts also included coal and freight charges, while international prices had risen sharply. The article says ordinary consumers eventually bore the increased fuel costs.

A year later, the power minister conceded that average power purchase cost had risen by 71 paise in 2022-’23. He attributed the increase to various costs, including transmission and distribution. The evidence therefore links the import episode to higher consumer costs, although the final increase included more than coal alone.

Domestic coal production was generally rising, apart from a small dip in 2020. But production at mines does not automatically mean fuel is available at power stations. The article reports that coal despatch—the movement of coal from mines to industries—declined for two successive years leading to 2022.

Several pressures created the gap. Internal correspondence blamed monsoon-season disruption in coal supply and transport. At the same time, electricity demand surged. As deliveries fell short of requirements, stocks at thermal stations continuously depleted from July to September 2021 and reached extremely critical levels in October. This happened even though public statements denied a national coal shortage.

The episode shows why supply chains matter alongside production totals. More mining could not immediately prevent shortages if coal was not transported fast enough to generators. The government responded by directing imports, but international prices were high. That solution helped address fuel availability while increasing costs for power companies and, ultimately, consumers.

Thermal coal is coal used as a fuel to produce heat. In the article’s context, it is the main fuel for most of India’s thermal power generation. The article discusses domestic and imported coal, but it does not provide a technical definition or explain the full conversion process.

In a conventional coal-fired plant, coal is burned in a boiler. The heat turns water into high-pressure steam. That steam flows across turbine blades and makes the turbine rotate. A generator connected to the turbine converts the rotation into electrical energy. The electricity then moves through the power network to users.

Imported coal can be blended with domestic coal, and the article notes that imported coal has lower ash content. Some coastal stations are designed to use imported coal as their primary fuel, while others blend smaller quantities. This helps explain why the mandate affected plants differently and why some companies cited technical reasons for resisting imports.