Arundhati Bhattacharya, Chairwoman of State Bank of India, has defended the $1 billion loan that the country’s largest lender has issued for Adani Group‘s Carmichael Coal Project in Queensland, Australia, saying the bank’s board has yet to finalise the disbursement of the loan.
“This is a Memorandum of Understanding (MoU), this is not a loan sanction that we have given. It will go through proper due diligence, both on the credit side, as well as on the viability side. All of that will be done. The board has to take a call, and only then money will be given,” Ms Bhattacharya said.
As reported by the Business Standard, the $7.2 billion coal project has received the necessary regulatory approvals by the Queensland Government during Prime Minister Narendra Modi’s visit to Australia for the G-20 Heads of State summit.
In addition, the Queensland Government has also committed to help fund the 388 km railway line which would connect the coal mine to Abbot Point port near the Great Barrier Reef.
The proposed $7.2 billion coal project has been heavily criticised by environmental groups such like Greenpeace, but also by experts who have expressed their concerns regarding the viability and financing of the project, saying other banks like HSBC, Deutsche Bank, and Royal Bank of Scotland have stayed away from the project due to the risks involved.
However, Ms Bhattacharya said she had received assurances by the Deputy Premier of Queensland, Jeff Seeney, that the state did not have any environmental concerns with the project.
“We have checked with the Queensland government. They have clarified that there are no environmental issues. Greenpeace will make a problem anywhere. The threat to the great barrier reef is not from Abbott Point port,” she said.
“The government has clearly said that there is much more threat to the Great Barrier Reef from farm run-offs and starfish attacks than from this port.”
Ms Bhattacharya also rubbished claims disputing the viability of the project, saying shipping coal to India from Carmichael mine was cheaper compared to transporting it from any other resource-rich nation.
“Over there, coal is available at $42 FOB (Free on Board), whereas even today coal around the world is $62 minimum price. So there is no viability issue and the quality of coal there is excellent. It is much better than the coal we are getting locally at this point of time. So it is much less polluting,” she said.
As reported by Business Standard earlier, Adani Enterprises had amassed a total debt of around Rs 72,000 crore on a consolidated basis at the end of the September quarter translating into a debt to equity ratio of around 2.94:1. Adani Mining, the Australian subsidiary, itself has $1 billion in debt, negative shareholders’ funds, zero revenue and high cash burn.