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NEW DELHI, Nov 26 (Reuters) – The Indian state of Andhra Pradesh is likely to suspend a power purchase deal linked to the Adani Group following the U.S. indictment of the group’s billionaire founder Gautam Adani over an alleged bribery scheme, two sources at the state government.

The southern state will ask the federal government government and the Solar Energy Corporation of India (SECI), which awards power supply contracts to companies like Adani, to investigate the allegations, the sources said.

The delaylikely to be announced soon, would be the first such action by an Indian state government, after US prosecutors accused Gautam Adani and seven others of agreeing to pay $265 million in bribes to unidentified Indian government officials to secure contracts for to obtain the supply of solar energy.

Most of the alleged bribes – $228 million – were paid to a government official to get Andhra Pradesh state’s electricity distribution companies to agree to purchase power, the US indictment said. Adani has said the allegations are unfounded

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 win a majority in the national elections concluded in June.

Modi’s federal government has so far not commented on the US charges against Adani.

The power supply to Andhra Pradesh under the SECI According to one of the sources, the agreement would take effect next year.

“The decision will be made very soon,” the second source said of the planned suspension.

Clauses in the power supply agreements stipulate that Indian states can terminate contracts and also exclude the companies involved from any future bidding if the bidder has committed a serious violation.

Adani Group and the Andhra Pradesh government did not immediately respond to Reuters requests for comment.

Reuters reported earlier on Tuesday that Andhra Pradesh is exploring the possibility of canceling a power supply contract linked to the Adani Group.

Andhra Pradesh’s previous ruling party – YSR Congress Party – under whose administration the alleged misconduct took place, last week denied any wrongdoing.

(Reporting by Sarita Chaganti Singh Aftab Ahmed. Editing by Louise Heavens and Mark Potter)