Credit:Michael Mucci It is with great ingenuity therefore that Tony and Joe have devised a foil to this dastardly profit-making CEFC. In some quarters it has been dubbed the DEFC, the Dirty Energy Finance Corporation, and it is designed to make, what else? A loss. In the budget papers they refer to it not as DEFC but as Northern Australia Infrastructure Facility. It is a $5 billion loan scheme "targeted at projects likely to generate returns not sufficient to attract full commercial funding". On the one hand therefore we have a CEFC whose mandate is to make a profit – and it does make a profit – while on the other hand we have the DEFC where the government shrewdly borrows on behalf of projects that are uneconomic and asks for no risk premium in return. Lay down misere

So it is that we have here today, before our very eyes, the latest financial statements for Adani Mining: the quintessential candidate for DEFC financing. Adani not only presides over an economic white elephant nonpareil​, but also over a project so brown that, should it eventuate, may double Australia's greenhouse emissions and even wipe out a bit of the Great Barrier Reef to boot should they dredge the port at Abbott Point. Let's ignore Adani's environmental eligibility for DEFC approval for now – it is clearly a lay down misere – and focus on its financial bona fides as the company spearheading the Galilee Basin coal-mining venture. Adani Mining is owned 100 per cent by heavily leveraged Indian group Adani Enterprises, which experienced an 85 per cent drop in its market value in India this week in the wake of its restructure. If Adani Mining is to proceed with its Carmichael project in the Galilee Basin, it will need approval from government here (yet to be achieved), project funding from the banks (yet to be found), and the support of its parent Adani Enterprises (one-seventh of the size it once was).

You would be hard-pressed to find a more insolvent-looking set of financial statements than these. You would be hard-pressed to find a more insolvent-looking set of financial statements than these. Last year, Adani Mining reported a net loss of $185 million, after a loss of $94 million in the prior year. Shareholder equity fell from negative $45 million to negative $230 million while net debt rose $328 million to $1.34 billion. Current liabilities exceed current assets by $1.23 billion. This is the company that requires roughly another $13.5 billion in funding for its Galilee project ($16.5 billion all up, stage 1 needs $7 billion, and $3 billion is already sunk). In other words, Adani Mining is dead in the water without its parent, Adani Enterprises, which is shown in the accounts as providing a one-year guarantee. (The auditor, Ernst & Young, doesn't offer an assessment of Adani as a going concern). The market value of Adani Enterprises has fallen from its peak of $US14 billion to its new base of just $US1.92 billion this week.

But what of the viability of the project itself? A Queensland court last month heard the coal price assumptions in Adani's financial model were twice the prevailing market forecasts while its cost estimates were so flowery, if true they would render Adani a more efficient coal miner that BHP, Rio, Glencore and Peabody. A spokesman for Treasurer Hockey is already on the record as saying Galilee Basin coal projects could qualify for funding. Adani and its Carmichael project would be excellent candidates. Unless the coal price doubles, which is a fantasy scenario only entertained by prominent Sunshine coast businessmen and politicians, this little beauty will dust billions of dollars for the taxpayer. Mind you, in the event that thermal coal prices went through the roof and the project somehow got up and made some money, the profits would end up in an island off the coast of West Africa anyway. Adani Mining in Australia is owned by an Adani company in Singapore, which is in turn owned by an Adani company in Mauritius.

First things first though – without the help of the DEFC, Adani Mining will have to rely on Adani Enterprises, which is now a $US2 billion free-standing entity focused on coal and agricultural trading. How will it now prioritise its capital spending? Having committed to Indian Prime Minister Modi in January 2015 to spend $US5 billion on a solar joint venture with the Rajasthan government, and then to spending $US4 billion to build India's largest solar module manufacturing facility in Gujarat, things look tight. That's before the acquisition of a new coal deposit in India in April 2015, while it has publicly said to be considering a move into defence and helicopter manufacturing later this year – oh, and bidding for a major fertiliser-manufacturing business to complement its June 2014 $US4 billion greenfield methanol/coal-to-liquids proposal for Gujarat.