India’s Adani Green Energy has informed Sri Lanka of its decision to withdraw from two proposed wind power projects, the company announced on Thursday. This decision comes just two weeks after the Sri Lankan government stated its intention to renegotiate the costs associated with the power generated by these projects.
Sri Lanka had initiated a review of the Adani Group’s projects following allegations made by U.S. authorities in November. The allegations claimed that billionaire Gautam Adani, along with other top executives of the conglomerate, was involved in a scheme to pay bribes to secure Indian power supply deals. The Adani Group has consistently denied these accusations.
In January, the Sri Lankan government revealed that it had entered discussions with the Adani Group to lower the cost of power from the wind energy projects. Initially, the power cost was estimated at $0.08 per kilowatt-hour (kWh), but the government was aiming to reduce it to approximately $0.06 per kWh or even lower. These projects, together, were expected to cost around $1 billion.
However, an Adani Group spokesperson stated that the company decided to withdraw from the projects as they were deemed “financially unviable.” The company highlighted that a new committee, appointed by the Sri Lankan cabinet, would be re-evaluating the terms of the projects. In a letter addressed to the chairman of Sri Lanka’s investment board, Adani Green Energy acknowledged and respected the sovereign rights of Sri Lanka and its prerogative to reassess agreements. As a result, the company decided to step away from the proposed wind power projects in Mannar and Pooneryn.
The letter, dated Wednesday and reviewed by Reuters, indicated that Adani Green Energy had carefully considered the situation before making its final decision. Despite withdrawing from these specific projects, the company reaffirmed its commitment to Sri Lanka and expressed willingness to explore future collaborations should the government in Colombo wish to engage with them at a later stage.
When approached for comments, Sri Lanka’s investment board declined to state the matter. Additionally, the secretary of the power ministry was unavailable for immediate comment.
Adani Green Energy’s initial agreement with Sri Lanka encompassed the development of two wind power facilities in the northern region—one in the town of Mannar and another in the village of Pooneryn. These projects were also intended to be accompanied by two related transmission infrastructure projects, essential for integrating the power supply into the national grid.
Beyond its involvement in renewable energy, the Adani Group continues to play a significant role in Sri Lanka’s infrastructure landscape. The conglomerate remains engaged in the development of a $700-million terminal project at Colombo’s largest port, a major initiative for enhancing the island nation’s maritime trade capabilities.
Sri Lanka, a country that has faced severe economic challenges, including crippling power shortages and fuel crises in 2022, has been aggressively pushing for renewable energy investments. The aim is to mitigate reliance on costly imported fuels, which have significantly strained the country’s economy. As part of this strategy, the government has been keen on expediting renewable energy projects that can provide a sustainable and cost-effective alternative to electricity generation.
Although the Adani Group has opted out of the wind power projects, the Sri Lankan government continues to explore various avenues to bolster its renewable energy sector. The withdrawal of a major investor like Adani Green Energy may prompt the government to seek alternative partnerships or reconsider its energy policy framework to attract viable investors in the future.