Adani’s US woes put TotalEnergies on the spot

Awkwardly, Adani Green is now at the centre of US corruption charges. US prosecutors allege that Gautam Adani and others agreed to pay $265 million in bribes to Indian government officials between 2020 and 2024, in order to secure solar-power contracts for Adani Green at above-market rates.

Their interest is that Adani Green raised $175 million from US investors via a 2021 bond offering. Adani denies the charges.

Total investors’ relatively sanguine share price reaction may reflect that they see this is as different from the company’s 2018 experiences in Iran. Back then, the threat of US secondary sanctions obliged Total to back out of a key gas project in the Islamic Republic.

Adani’s bribery charges seem a different sort of challenge, and Total itself hasn’t been accused of anything. Pouyanné will be keen to ride out the storm, as he did when Adani was the subject of a short-seller attack last year.

Patrick Pouyanné is used to coping with tricky circumstances in emerging markets. The TotalEnergies CEO was one of the few western bosses to attend Saudi Arabia’s Future Investment Initiative in 2018 in the immediate aftermath of Jamal Khashoggi’s murder by Saudi agents. And he took his time to pull out of Russia after its war with Ukraine. Even so his company’s close relations with Indian billionaire Gautam Adani, who is facing US bribery charges, still constitute a challenge.

The French energy giant’s Adani connection goes back to 2018, when the two companies developed a liquefied natural gas (LNG) business together. Pouyanné now holds a 37% stake in Adani Total Gas plus a 20% in Adani Green Energy, which, at 11 gigawatts (GW) of solar and wind capacity, is the biggest renewable player in the country. In September, Total doubled down with Adani Green via a separate solar joint venture.

Still, the long arm of US law represents a cloud that will hang over Total’s Indian plans. Bernstein analysts flag the risk that Total receives questions about its due diligence before becoming involved with Adani. They also point out that while Total’s Indian investments represent only 3% of its total capital employed, the country contributes 6 GW, or about 25% of Total's operational renewables portfolio. Adani Green’s 50 GW target for renewable power capacity by 2030 dovetails with Total’s own ambitious capacity goal of 100 GW by the same date.

Source: Reuters