India's Andhra Pradesh state is likely to suspend a power purchase deal linked to Adani Group due to the U.S. indictment of the group's billionaire founder Gautam Adani over an alleged bribery scheme, two state government sources said.
The southern state will ask the federal government and the Solar Energy Corporation of India (SECI), which awards power supply contracts to companies like Adani, to investigate the charges, the sources said.
The suspension, likely to be announced soon, would be the first such action by an Indian state government after U.S. prosecutors charged Gautam Adani and seven others with agreeing to pay bribes of $265 million to unidentified Indian government officials to obtain solar power-supply contracts.
Most of the alleged bribes - $228 million - were paid to a government official to get Andhra Pradesh's state electricity distribution companies to agree to purchase power, the U.S. indictment said. Adani has said the allegations are baseless
Andhra Pradesh is ruled by Prime Minister Narendra Modi's key ally Chandrababu Naidu, whose party has the second highest number of parliamentary seats in the coalition government formed after the main Bharatiya Janata Party failed to get a majority in national elections concluded in June.
Modi's federal government has so far not commented on the U.S. indictment of Adani.
The power supply to Andhra Pradesh under the SECI agreement was scheduled to start from next year, according to one of the sources.
"The decision will be taken very soon," the second source said about the planned suspension.
Clauses in the power supply agreements provide for Indian states to terminate contracts and also bar the companies involved from any future bidding if the bidder has committed a serious transgression.
Adani Group and the Andhra Pradesh government did not immediately reply to Reuters requests for comment.
Reuters reported earlier on Tuesday that Andhra Pradesh was exploring the possibility of cancelling a power supply contract linked to Adani Group.
Andhra Pradesh's previous ruling party - YSR Congress Party - under whose administration the alleged misconduct took place, last week denied any wrongdoing.
