Shares of Adani Energy witnessed a sharp decline following an announcement by Kenyan President William Ruto, who revealed the cancellation of two major contracts with India’s Adani Group during his state of the nation address on Thursday. The decision comes amid bribery allegations involving Adani Group’s founder, Gautam Adani, in the United States.
As of 9:15 am the shares were trading 7.58% lower at ₹644.40 on NSE.
Cancellations at a glance:
- Airport Management Deal:
- The procurement process to hand over the management of Kenya’s main airport to the Adani Group was terminated.
- Power Transmission Lines Contract:
- A 30-year, $736-million public-private partnership agreement signed in October with Adani Group for the construction of power transmission lines was revoked.
Reasons behind the cancellation:
- President Ruto attributed the cancellations to “new information provided by investigative agencies and partner nations.” This comes shortly after U.S. prosecutors accused Gautam Adani and other senior executives of paying $265 million in bribes to Indian officials to secure solar energy contracts.
Statements from Kenyan officials:
- William Ruto: Highlighted the significance of integrity in government dealings, stating, “I have directed agencies within the ministries of transport and energy to immediately cancel the ongoing procurement.”
- Energy Minister Opiyo Wandayi: Earlier defended the transmission lines contract, asserting no corruption was involved in the deal.
Adani Group’s response:
The Adani Group denied all allegations, terming them “baseless” and announced plans to pursue “all possible legal recourse” to defend itself.
Implications:
These cancellations represent a significant blow to the Adani Group’s international ventures and could further amplify the global scrutiny it faces in light of recent bribery allegations. The developments have added to investor concerns, leading to a drop in Adani Energy’s share price in Thursday’s trading session.
