Home > State Bank of India still considering loan to “fully funded” Adani coal project

State Bank of India still considering loan to “fully funded” Adani coal project

5 August 2021

In November 2020, Indian media reported that the State Bank of India (SBI) was considering a A$1 billion loan for Adani’s Carmichael thermal coal project. People all over the world took immediate action, leading to international news headlines and a string of the globe’s biggest investors speaking out against the loan.

Due to this backlash the loan never materialised, with reports in April and again in July indicating the loan decision has been stalled.

What is missed in all this coverage is one critical factor. Adani Group has clearly stated the Carmichael project is already fully funded with internal Adani Group funds. So why is SBI still considering a loan for a risky, destructive, climate-wrecking project which, according to the proponent, is not even needed?

In addition to being fully funded, according to Adani the capital expenditure (CAPEX) for the construction of the Carmichael coal mine and rail line has been mostly spent. On 5 May 2021, speaking on an Adani Enterprises earnings conference call, the CFO of the Adani Group stated, “the total CAPEX for the [Carmichael] project is USD 2.7 billion out of which USD 2.3 billion is already spent.” So, not only has the Adani Group expressed no need for the funds, its remaining CAPEX is far less than what SBI is looking at providing. So why then, is Adani still pursuing this line of credit and why won’t SBI take it off the table?

Robbie Singh, CFO of Adani Group on LinkedIn, confirming Carmichael is fully funded — Adani’s CFO confirms the Carmichael thermal coal project is fully funded in response to questioning by Market Forces on LinkedIn, April 2021.

In the July interview the SBI chairman Dinesh Khara made the point that the proposed credit facility is not a loan but a standby line of credit or SLC, which is sometimes used as a backup funding source when other sources fall through. Even so, no explanation has been provided as to why this is needed and what Adani Group would use this for.

No privately owned bank will go near the Carmichael project with its catastrophic climate impacts and the huge reputational and stranded asset risks associated with it. Being majority government owned, SBI lending to Adani exposes Indian taxpayers to these risks and could see even more of its own investors withdraw support.

Some of SBI’s own staff see financial support for Adani as the result of political influence and with so few reasons in favour of this line of credit, it’s not hard to see why. But the board is not immune to global pressure and has backed down from lending to Adani before – tell SBI to again walk away from Carmichael and demonstrate its service to the Indian public, not the Adani Group.

Take action

Tell the State Bank of India that, in 2021 when Covid-19 and climate change are threatening millions of lives, lending to a new thermal coal mine would be a global disgrace.

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Dear Chairman, I am extremely concerned about reports that SBI is on the verge of extending a AU$1 billion line of credit to Adani for the development of the Carmichael thermal coal project. I am writing to you to urge you to rethink this decision and announce publicly that you will not provide any support to Adani/Bravus Mining Australia and the Carmichael coal project, similar to the position SBI took in 2015. At a time when India is planning to phase out thermal coal imports, and with renewable energy already outperforming coal economically, we know that there is no financial or economic grounds for the loan to Adani. The Carmichael project is the object of years-long international controversy and resistance. It would increase shipping and industrial activity in the already stressed Great Barrier Reef World Heritage Area. The traditional owners of the land on which the mine would be dug, the Wangan and Jagalingou, continue to oppose the project. Critically, the world is on the brink of triggering runaway climate change, and the Paris climate change agreement struck in 2015 aims to hold global warming to below 1.5˚C above pre-industrial levels. India and Australia are both already experiencing the devastating impacts of global warming, with ever-worsening heatwaves, droughts and floods costing lives and livelihoods. SBI’s funding of the Adani Carmichael project would make things even worse, having the potential to open up an entirely new thermal coal basin when the need to replace coal with clean energy has never been greater. Finally, the CFO of the Adani group has confirmed that the project is fully funded already and the vast majority of the capex already spent. Over 100 companies have ruled out working on the project and no private banks are willing to fund it. Due to Carmichael’s negative impact on the climate and its lack of economic merit, any company associated with the project will be held accountable by the global community and will see its reputation profoundly damaged. I hope to receive your prompt reply that unequivocally rules out any further involvement by your bank in any part of the Adani Carmichael coal project. Sincerely,
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Don’t fund Adani @TheOfficialSBI! Lending A$1 billion would lock vulnerable communities into expensive and toxic Adani #coal power. Amid the global pandemic and climate crisis – funding Adani coal is dangerous and irresponsible #StopAdani
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How can @TheOfficialSBI still be considering lending A$1 billion for Adani’s coal mine in a global pandemic and worsening climate crisis? Locking Indian communities into expensive and toxic Adani #coal power. SBI: rule out funding Adani coal #StopAdani
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