The Indian group Adani has announced its withdrawal from a major wind farm project worth $442 million (approximately €424 million) in Sri Lanka. This decision follows the Sri Lankan government’s intention to renegotiate the electricity purchase agreement. The Sri Lankan Investment Board (BOI) revealed it had received a letter from Adani Green Energy Limited, stating that the group had “respectfully decided” to withdraw from the project.
Renegotiation of the electricity purchase agreement
The wind farm project, which was expected to have a capacity of 484 megawatts, was approved by the Sri Lankan government in February 2023. However, the situation changed after the current government annulled a previous electricity purchase agreement with Adani. This annulment was motivated by a reassessment of rates, aiming to negotiate more competitive prices for the electricity produced by the future plant. The electricity price had been set at $0.0826 per kilowatt-hour, a rate that sparked criticism within the government for being too expensive.
Political issues and corruption allegations
The Sri Lankan government’s decision comes amid a tense political climate, fueled by President Dissanayake’s criticism of agreements signed under the previous administration. In September, the president pledged to fight corruption, leading to calls for a review of deals seen as favoring private interests. The Adani project was singled out due to corruption allegations, particularly in light of the ongoing U.S. investigation into the Adani group and its CEO, Gautam Adani, concerning bribery in the solar energy sector in India.
Adani’s $5 million expenditure
Adani confirmed that it had already invested around $5 million in pre-development activities for the project. This includes preparatory studies and the establishment of initial infrastructure necessary for the construction of the wind farm, which was planned to be located on the northwest coast of Sri Lanka. Despite this withdrawal, Adani stated that it remains open to potential future opportunities in Sri Lanka, highlighting its willingness to cooperate with the government for other projects in the region.
Legal and environmental contexts
In addition to political tensions, the Adani project also faced legal obstacles related to environmental concerns. The project was subject to a Supreme Court procedure in Sri Lanka, where questions about the ecological impacts of the wind farm were raised. These proceedings delayed the project’s progress, adding to the uncertainty surrounding its future. Furthermore, the Sri Lankan government opened an investigation into Adani’s investments in the country following the corruption charges against its CEO.
