The Adani Group's entire A$3.5 billion (Rs 178
billion) debt-funded 'investment' in Australia is gravely at risk, the US-based Institute
for Energy Economics and Financial
Analysis (IEEFA) said on
In a new report it details how Adani's Abbot Point CoalTerminal has excessive financial
leverage, negative shareholders equity and runs the risk of becoming a stranded
asset if Adani's Carmichael mine does not get a $1 billion Australian subsidy.
The Abbot Point Coal Terminal is due for a $1.5 billion debt refinancing next
year and a cumulative debt refinancing of $2.11 billion by 2020.
Currently, operating at just over 50 per cent capacity, the Abbot Point Coal
Terminal needs the Carmichael mine to fill the gap created as its current
take-or-pay contracts progressively expire.
"Securing this refinancing is going to be a real challenge, not the least
because the port value has been tied to the success of the Carmichael coal mine proposal which is itself yet to secure funding
and which the 'big four' Australian banks have refused to touch," an
official statement quoting report co-author Tim Buckley said.
Buckley is the IEEFA's Director of Energy Finance Studies, Australasia.
"The potential for a loss of up to $1.5bn on any decision to walk away
from Carmichael mine and rail proposal, explains why the Adani Group has been
so focused on securing Australian tax payers money and royalty holidays to subsidise
his loss making ventures," he said.
"To the extent able to be analysed from Australian Securities and
Investments Commission records, Adani's entire mine, rail and port operation in
Australia looks to be 100 per cent debt financed and shareholders funds now
tally an unprecedented, negative $458 million combined. The value at stake for
the Adani Group's Carmichael mine proposal is far bigger than previously
understood," Buckley added.
Whilst Adani continues to search for overseas project funding, the report,
"House of Cards: The Escalating Financial Risk of Adani's Abbot Point Coal
Terminal", the report traces events that make the Carmichael project an
even greater financial risk.
The events include Adani's major proposed off-take coal customer, Adani PowerLtd's 4.6 GW power plant at
Mundra in Gujarat, is financially distressed and its equity is for sale for
just Re 1 but has no buyers so far.
India's thermal coal imports have continued the downward trend of the last two
years and are down 13 per cent year-to-date in 2017 compared to the prior year.
And, in the light of new solar infrastructure projects delivering electricity
at prices now 20 per cent below many Indian thermal power plant tariffs,
financial analysts don't see any imported coal demand to justify more expensive