Neither the government of Sri Lanka nor India’s Adani group want to let go of Adani Green Energy’s over $400 million renewable energy project in the island country with large investments apart from strategic diplomatic stakes involved in the venture.
Sri Lanka wants to renegotiate on the tariff for every unit of power with Adani Green for the proposed project in that country. According to the President of the EOI Project Developers Association, Aruna Kulatunga, “tariff is the key, and at present the proposed tariff quoted by the Adani’s for the project is seen as high.” EOI Project Developers Association is a body of 47 companies including local blue chip companies that look into the issues arising out of expression of interests.
Though top executives at Adani Green were tight lipped about the status of the project, sources indicated that it would eventually go through once tariff terms were amicably resolved.
According to sources, Sri Lanka would like the tariff to be below 7 cents a unit. Multiple sources told businessline that while there is no power purchase agreement (PPA) amidst the stakeholders and only a letter of intent was issued, there was officially approved unit purchase price for the project.
There was no response from the Adani group to an email sent by businessline seeking clarification on the project, its terms and way forward.
Three methods
Since this deal was done by the previous regime without any bidding process, it has attracted attention. Sri Lanka has three methods for projects — government to government, normal tendering process, and emergency procurement. The Adani project is understood to be a government-to-government project.
The $442 million, 484 MW wind farm projects by Adani Green Energy in Mannar and Poonerin was approved by Sri Lanka’s Board of Investment in early 2023 and subsequently an agreement was also signed for power supply at 8.26 cents per kWh, for 20 years.
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According to reports, in 2024, a public interest litigation was filed against the project by environmentalists challenging the terms of power procurement, stating the tariff would lead to losses for Sri Lanka and burden its consumers. The PIL had also said that a Technical Evaluation Committee appointed by the country to negotiate the project had suggested 5 cents per kWh.
Last month when reports surfaced of Sri lanka revoking Adani Green’s project, the Adani group said it was false and misleading.
“We categorically state that the project has not been cancelled. The Sri Lankan Cabinet’s decision of January 2, 2025, to re-evaluate 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. Adani remains committed to investing $1 billion in Sri Lanka’s green energy sector, driving renewable energy and economic growth,” it said.
Those tracking energy in Sri Lanka said, to renegotiate the tariff the Cabinet papers of the previous regime need to be revoked. “It is not scrapping of the project, per se,” another source said.