New Delhi: Adani Green Energy has informed the Sri Lankan government of its withdrawal from the two controversial wind power projects Thursday, weeks after denying the cancellation of the project.
The Sri Lankan administration under President Anura Kumara Dissanayake had begun reviewing the project following the announcement by US authorities of investigating the group for allegedly paying out bribes to secure power deals with Indian state governments.
Dissanayake, during his visit to India in December 2024, made it clear that the Sri Lankan administration is not concerned by the Adani Group’s dealings in other countries, and only focused on the deals struck in the island nation. The Sri Lankan President had highlighted the administration’s keenness for more investments from Indian firms.
The proposed investments in the Pooneryn and Mannar plants total approximately $1 billion. Dissanayake had vowed to cancel the deal if elected. However, the administration opted to revoke the power purchase agreement (PPA) with the Indian conglomerate and renegotiate for lower energy prices.
“Our executives recently had discussions with CEB officials as also with Ministry officials at Colombo. It was learnt that another Cabinet appointed negotiations committee (CANC) and Project Committee (PC) would be constituted to renegotiate the project proposal,” said a letter from the Adani Group to the Sri Lankan Board of Investment.
The letter added: “This aspect was deliberated at the Board of our company and it was decided that while the company fully respects the sovereign rights of Sri Lanka and its choices, it would respectfully withdraw from the said project.”
The group had informed the Board of Investment that it had spent around $5 million on the pre-development activities revolving around the two projects. The two wind farms would have generated roughly 484 MW, with the group building the associated transmission systems and additional transmission network expansion to carry power to the south of Sri Lanka.
On 24 January, 2025, the group denied that the project was cancelled by the Sri Lankan government.
“Reports that Adani’s 484 MW wind power projects in Mannar and Pooneryn have been cancelled are false and misleading. We categorically state that the project has not been cancelled. The Sri Lankan Cabinet’s decision of 2 Jan 2025 to reevaluate the tariff approved in May 2024 is part of a standard review process, particularly with a new government, to ensure that the terms align with their current priorities and energy policies,” said Adani Group at the time.
In its letter to the Board of Investment, the conglomerate indicated that it is willing to consider any future investments in Sri Lanka, if the government “ever considers” the participation of the Adani Group in such projects.
The Adani Group is also involved in the development of a deep-water container terminal in Colombo. It signed a build-operate-transfer agreement with its Sri Lankan partner John Keells Holdings and the Sri Lankan Port Authority (SLPA) in 2021 to develop Colombo’s Western Container Terminal.
In November 2023, the US International Development Finance Corporation (DFC) had announced a first-of-its-kind funding of $553 million in the project. The US announcement came as Washington D.C. looked to make investments in infrastructure projects in the Indo-Pacific, as it competes with China’s Belt and Road Initiative (BRI).
However, in December 2024, Adani announced that it would be opting out of US funding for the container terminal project, and will instead use its own resources to complete the expansion.
At the time, the DFC was evaluating the ramifications of the alleged bribery charges against the Adani Group being investigated by the US Justice Department. The Adani Group rejected the charges as baseless. However, the Group saw deals around the world cancelled, including up to $2.5 billion worth of deals in Kenya.
US President Donald Trump paused the enforcement of the Foreign Corrupt Practices Act (FCPA), the law which is at the heart of the case against the Adani Group. The FCPA prevents American firms and foreign companies from bribing officials in third countries for government contracts. Trump’s executive order pausing the enforcement of the law was signed earlier this week. The review of the FCPA by Trump’s Attorney General Pam Bondi could offer the Adani Group relief from US investigations during the review period.
(Edited by Zinnia Ray Chaudhuri)
A larger point, which applies to the Indian power market as well. Renewables are the future. In fact, 45% of India’s installed capacity is already accounted for by them. Marketing has already become a problem. The financial condition of the discoms a factor. Long duration power purchase agreements are undermined by the continuously falling costs for solar and wind. Which sometimes make earlier contracts appear unduly generous. 2. Ways should be found, initially using open access, to encourage private producers to sell directly to consumers. Perhaps bulk consumers to begin with. 3. Enron’s Dabhol power project remains an abiding lesson for all.