SYDNEY, Feb. 7, 2014 (IEEFA) – News reports centering on the ownership of Adani’s Queensland coal port assets, lavish subsidies and alleged financial irregularities should be investigated by regulators, the Institute for Energy Economics and Financial Analysis (IEEFA) said today.

“It is critical that a detailed inquiry and investigation by state and federal agencies commences immediately to ensure that financial markets are being provided accurate information about Adani’s proposed coal mine, rail and port projects in Queensland,” said Tim Buckley, IEEFA’s director of energy finance studies, Australasia.

Today’s Sydney Morning Herald investigation highlights a ‘dubious’ lack of transparency over ownership of Abbot Point Port, as well as allegations of tax avoidance through offshore vehicles based in Singapore and the Cayman Islands.

“The assertions reported today go to the very heart of our continued analysis of Adani’s operations here and overseas,” Buckley said. “They create even stronger doubts about the key questions of their financial viability, corporate transparency and strategic logic in the face of the structural decline of seaborne thermal coal markets.”

Buckley said also that—as IEEFA has previously documented—Galilee coal project proposals are highly unlikely to proceed without the support of the four Australian bank majors, plus some of the nine leading global investment banks. While export-import banks like the Korean Export-Import Bank could be material players, given that their focus is more risk-tolerant towards greenfield projects, even they will be involved only if there is a clear strategic national benefit.

Buckley said, “These reports today should be a loud warning for any investors and financiers until an investigation has been carefully undertaken and completed. A very serious set of questions needs to be answered.”

Buckley noted also that research by IEEFA has shown that the Adani proposal is not commercially viable without government support, contrary to Adani’s claim after last week’s Queensland election that it could develop the project solely with private money.

“The obvious question that neither the company nor the outgoing government seem capable of answering is why subsidies were being offered to begin with,” Buckley said.

“Regulators need to investigate every aspect of today’s news reports to ensure all appropriate disclosures, sources of equity and debt funding, advice to potential investors plus notices to stock exchanges and corporate regulators here and overseas were carried out in accordance with the laws that govern such matters.”

The proposal to open the Galilee Basin for up to nine new mega-coal projects would see up to 300 million tonnes per annum of additional thermal coal exports, even though a 60 percent decline in coal prices over the past four years reflects significant global oversupply and weaker-than-expected demand.  IEEFA research has shown also that opening the remote, low-quality Galilee Basin coal to export would fly in the face of increasing action on climate change by many of Australia’s major trading partners.

About IEEFA

The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce dependence on coal and other non-renewable energy resources.

More here on IEEFA research: http://ieefa.org/category/subject/reports/