Days after Adani Green announced exiting a controversial renewable energy project in Sri Lanka, President Anura Kumara Dissanayake said awarding energy projects at an “excessive tariff” of $8.26 cents/unit “cannot be justified”.
While welcoming energy investments based on a competitive tariff, Sri Lanka will not privilege a specific company or country, he said on Monday, without naming Adani or India.
Dissanayake’s statement, made during his maiden Budget speech in Parliament, is Sri Lanka’s first official reaction to the Adani Green decision, conveyed to Sri Lanka’s Board of Investment in a February 12 letter.
Citing another project signed recently with a local company, Dissanayake said: “We awarded a tender to a 50 MW wind power project at $4.65 cents for a unit of electricity. In that context, awarding projects at an excessive tariff around $8.26 cents cannot be justified.”
Meanwhile, Sri Lankan Foreign Minister Vijitha Herath also told The Hindu on Monday that the withdrawal of Adani Green from the power project did not arise due to a change in government, but because of the “very high tariff” negotiated with the previous Wickremesinghe government.
Under review
He emphasised, however, that the Adani group’s decision had come as a surprise to the Sri Lankan government, as it was still in the process of review at the time.
“We had not taken any decision. This (withdrawal) was the decision of the (Adani) group company. I don’t know what is the reason behind their decision… they just sent an email to our Board of Investment.
“As a government, we have not discussed it yet,” said Herath, who was in Muscat for the eighth Indian Ocean Conference.
Legal challenge
According to sources familiar with the project, “another big concern” for the Adani wind power project in Mannar and Pooneryn in northern Sri Lanka, is that at least five petitions on human rights, land rights, and environmental concerns are to be heard by Sri Lankan courts this year.
In the past few months, the Adani group has faced similar setbacks in other countries, particularly after changes in government — in Dhaka, the Yunus government is reviewing tariffs on the Adani Jharkhand power project; indictments were filed against the group by the US Department of Justice in 2024 over a bond issue; and the Kenyan government scrapped contracts for Nairobi airport and power infrastructure.
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Speaking at the same conference in Muscat, hosted by the Indian and Omani foreign ministries and organised by the India Foundation, Adani Ports and SEZ CEO Ashwani Gupta defended the company’s practices. When asked if the company was considering revising its contract negotiation process to factor in the political changes, Mr. Gupta said that they consult “all stakeholders” in their international projects. “Wherever we go, we go with a very important objective, which is top-line growth and the bottom-line growth. We have to collectively work with all the stakeholders, and we do that as a matter of principle,” he said, responding to a question from The Hindu.
From the time of its conception and approval in Sri Lanka — without a competitive bid — Adani Green’s 484 MW wind power project has been mired in controversy, as locals, environmentalists and transparency watchdogs mounted fierce resistance, including at Sri Lanka’s top court. The legal challenges to it were on grounds of transparency and environmental impact.
The company’s call to withdraw the project came amid Sri Lanka’s emphasis on the need to renegotiate the “very high” tariff. In January this year, the Dissanayake administration revoked the 2024 power purchasing agreement inked with the company by the predecessor Ranil Wickremesinghe government. Sri Lanka had then agreed to purchase power at $0.0826, or 8.26 cents, per kWh from Adani Green. In an ongoing Supreme Court case, the Dissanayake government has said it will review the project, although Dissanayake during his election campaign vowed to cancel the “corrupt project”.
(Meera Sreenivasan is The Hindu Correspondent in Colombo. Suhasini Haidar is The Hindu’s Diplomatic Affairs Editor)