Don’t Invest Public Money in high risk Adani Coal to PVC Plant

Date: 31st August 2023

We the undersigned express our deep concern on reports in the news media which state that a State Bank of India (SBI) led consortium is planning to invest ₹ 34,000 crore in the first phase of Adani Enterprises led Coal to Poly Vinyl Chloride (PVC) project in Mundra, Gujarat. We urge the SBI led consortium to refrain from investing public money entrusted to them, in the Adani Group which has been under investigation by a Supreme Court appointed panel andand and by Securities and Exchange Board of India (SEBI) for alleged financial malpractices. In addition, big ticket investments in environmentally harmful projects go against the bank’s own commitments on sustainable finance and Sustainable Development Goals, and India’s International energy and climate commitments.

The proposed 2 million ton per annum coal to PVC plant, being constructed by Adani subsidiary Mundra Petrochem Ltd., bore the direct brunt of Hindenburg Research’s investigation alleging massive fraud by the conglomerate. The Company reportedly was forced to suspend construction of the plant in the wake of the allegations as Adani group experienced massive losses in market value of its shares and bonds. At a time when Adani Enterprises is overleveraged and is under an ongoing investigation, the reported attempt by public sector banks to raise ₹ 14,500 crore and the remainder by private banks, is a severe undermining of public trust in custodians of public money. According to an assessment carried out last year by CreditSights, a credit assessment unit of the Fitch Group, which points to the group’s high indebtedness, over-leveraged operations and debt-driven expansion into highly capital intensive projects in a wide range of new sectors. According to this report, “excessive debt and over-leveraging by the group could have a cascading negative effect on the credit quality of the bond issuing entities within the group and heightens contagion risk in case any entity falls into distress”.

Another report on the extent of over-leveraging of Adani Group’s activities appeared in the press in 2019. The report highlighted the complex web of subsidiaries set up by the group to carry on its operations in diverse sectors and pointed to excessive debt-dependence and leverage among the Group’s subsidiaries. The banks led by SBI need to immediately clarify their stand on the reports in order to restore the faith of crores of depositors and shareholders.

It is important to note that coal based projects became the principal line item in India’s terrifying bad loans problem, contributing to more than ₹ 1.74 lakh crores in NPAs. This Coal to PVC project has the potential to join the long list.

In addition to financial risks, this project also carries high climate risk. In June 2023, Mundra found itself in the path of a category 3 cyclone Biparjoy. Scientists have predicted that cyclones in the region could get more frequent and severe. Nagarjuna refinery in Tamilnadu was similarly impacted by cyclone Thane in 2011 and the company had to eventually file for bankruptcy causing loss of thousands of crores to their lenders.

In addition, what is worrying is the fact that coal to PVC is an attempt to rehabilitate coal through the backdoor. At a time when India is geared to phase down coal and is about to put an end to coal fired power plants to mitigate the climate crisis and achieve ‘net-zero’ by 2070, building a coal based plant for PVC manufacturing goes directly against the country’s climate commitments.

The coal-based manufacturing of PVC is highly environmentally damaging, emitting three times more greenhouse gases than conventional plastic production, exacerbating both the plastic waste and climate crisis. The coal to PVC plant in question, with numerous flue gas and process vent stacks, releases harmful particulate matter leading to various health problems, including respiratory issues and heart diseases. Vinyl chloride monomer from which PVC is made is listed as an International Agency for Research on Cancer (IARC) Group 1 carcinogen. Exposure to vinyl chloride causes liver cancer, eye, lung, and throat irritation, respiratory problems, adverse effects on newborns, and heart diseases. Additionally, toxic sulphur dioxide emissions pose severe risks to the respiratory system, contributing to acid rain and harming vegetation. Furthermore, the release of nitrogen oxides worsens greenhouse gas formation and generates hazardous gases, posing a significant threat to the climate, people, their livelihoods, and the environment in the Mundra region, all while the world is moving away from coal and fossil fuels.

The proposed plant plans to utilise 31 lakh tonnes of imported coal annually, adding a toxic pollutant burden to an already heavily polluted area near the Adani Port and Special Economic Zone in Mundra. This adds to the environmental concerns and challenges faced by the community in a region which already has several polluting and toxic industries.

The proposed investment thus shatters public faith, and poses immense environmental, social and climate dangers. Adani Group’s unsustainably high indebtedness, overleveraged operations, poor interest cover and continuous investment into commercially un-viable coal projects pose a serious threat to the stability of the financial system, the health of the banking system and indeed our economy. The bank’s management should immediately put the public’s doubts at rest and not go ahead with this high risk investment.

Signed by:

  1. Abhishek Saxena, Gujarat
  2. Aditi Mehta, IAS Retd, Udaipur, Rajasthan
  3. Akash Bhattacharya, AICCTU, Delhi
  4. Amit Kumar, Bangalore
  5. Amitanshu Verma, New Delhi
  6. Anand Mazgaonkar, Paryavaran Suraksha Samiti, Vadodara
  7. Anil Chaudhary, INSAF, Delhi
  8. Anil Rao, Goa
  9. Anil T Varghese, Pune
  10. Anilkumar G, National Confederation of Officers’ Associations, Palakkad
  11. Anmol Ohri, Climate Front India, Jammu
  12. Antara reddy, Hyderabad
  13. Anupama, New Delhi
  14. Arpita Bhagat, GAIA, Mumbai
  15. Arundhati Dhuru, NAPM, Lucknow
  16. Ashi Sara, MMTSC, Thiruvalla
  17. Ashish Kothari, Pune
  18. Ashok Shrimali, Mines, Minerals & People, Ahmedabad
  19. Avani Chokshi, Bangalore
  20. Avinash Kumar, Independent, New Delhi
  21. Bharat Patel, MASS, Kutch
  22. Centre for Financial Accountability
  23. Col.Sasanka Shekhar Swain (Army Veteran), Cuttack
  24. Debasis Shyamal, Dakshinbanga Matsyajibi Forum (DMF), West Bengal
  25. Deepa Padmanaban, Freelance Journalist, Bangalore
  26. Deepa Seshadri, Chennai
  27. Delhi Solidarity Group
  28. Deepika D’Souza, Consultant, Mumbai
  29. Dr. Avinash M, Chennai
  30. Dr. Lubna Sarwath, Hyderabad India
  31. Dr. Mira Shiva, Public Health Physician, New Delhi
  32. Dr.Suhas Kolhekar , National Alliance of People’s Movements , Pune,Maharashtra
  33. Financial Accountability Network, India
  34. Geo Dami, Poovulakin Nanbargal, Chennai
  35. George Thomas, Chennai
  36. Hari Om Singh, Allahabad
  37. Harshad Barde, Pune
  38. Inder Dev Ram, Jharkhand Mines Area Coordination Committee, Jharkhand
  39. James Zacharias, Individual, Ramapuram
  40. Jibin Robin, Friends of the Earth India, Chennai
  41. K Sukumaran, Advocate, The Nilgiris
  42. Karthik G, Chennai Climate Action Group, Chennai
  43. Kavita Krishnan, Feminist activist, Delhi
  44. Krishnakant Chauhan, Surat
  45. Lidy Nacpil, Asian People’s Movement on Debt and Development, Manila
  46. Madhuri, Madhya Pradesh
  47. Magline, Theera bhoo samrekshana veedhi, Kerala
  48. Meera Sanghamitra, National Alliance of People’s Movements (NAPM), Telangana
  49. Mohammad Chappalwala, Sambhaavnaa Institute, Palampur
  50. Mohan and Devika, Chennai
  51. Nandini Sundar, University Professor, Delhi
  52. Naresh Dadhich, Pune
  53. Neil Tangri, California
  54. Om Prakash Singh, Cuttack
  55. Persis Ginwalla, Ahmedabad
  56. Prakash Siju, Bhujodi, Bhuj, Kutch, Gujarat
  57. Pranay Raj, Delhi
  58. Priya Dharshini, Delhi Forum, New Delhi
  59. Purnima Upadhyay, Achalpur
  60. R Ravi, MM&P, India
  61. R. Ajayan, Navayugam Weekly, Trivandrum, Kerala
  62. Raj Kumar Sinha, Bargi Bandh Visthapit Evam Parbhavit Sangh, Jabalpur
  63. Ribhu Vohra, WasteLess, Auroville
  64. Roma, All India Union of Forest Working People, New Delhi
  65. Rosamma Thomas, Kottayam district
  66. Roshan Rai, Zero Waste Himalaya, Sikkim Darjeeling Himalaya and IHR
  67. Rupa Ramachandran, Retirement, Chennai
  68. S. Saroja, Chennai
  69. Sachin Chavan, Chartered Accountant, Mumbai
  70. Saktiman Ghosh, National Hawker Federation, Kolkata
  71. Sandeep Pandey, Socialist Party (India), Lucknow
  72. Saswati, Delhi
  73. Satyarupa Shekhar, Cuttack
  74. Sehjo Singh, Delhi
  75. Shabnam Hashmi, Anhad, Delhi
  76. Shanti Tiriya, Omon Mahila Sanghatan, Noundi, Jharkhand
  77. Sharadha Narayanan, Bengaluru
  78. Shibi Peter, Nagpur
  79. Shripad Dharmadhikary, Manthan Adhyayan Kendra, Pune
  80. Shriyuta Abhishek, Chhattiisgarh
  81. Siddharth Singh, Delhi
  82. Sitaram Shelar, Pani Haq Samiti, Mumbai
  83. Smruti Ranjan Pattnaik, Consultant, Bhubaneswar
  84. Souvik Roy, Mumbai
  85. Sreedhar Ramamurthi, Environics Trust, New Delhi
  86. Sri S, New Delhi
  87. Sriram, ATREE, Bangalore
  88. Subuni Suren, Omon Mahila Sanghatan, Noamundi, Jharkhand
  89. Tani Merlin Alex, Kerala
  90. Tanuja Sharma, Management Development Institute, Gurgaon, India
  91. Tara Murali, Chennai
  92. Thomas Franco, Chennai
  93. TN Krishna Das, Irinjalakuda
  94. Uma Shankari, Indian citizen, Hyderabad
  95. Vaishnavi Varadarajan, International Accountability Project, Global
  96. Vijay Kumar, Democratic Rights Forum, Madhya Pradesh, Bhopal
  97. Vijayan MJ, South Asian Solidarity Collective, New Delhi
  98. Wilfred Dcosta, Indian Social Action Forum, New Delhi
  99. Working Group on International Financial Institutions
  100. Yash Agrawal, Fridays For Future Mumbai, Navi Mumbai

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