India's Adani quits $442 mn Sri Lanka power project

COLOMBO: Indian conglomerate Adani Group has withdrawn from a troubled $442 million wind power project in Sri Lanka after the island nation’s government sought to renegotiate the deal.

Sri Lanka’s Board of Investment (BOI) said it received a two-page letter dated Wednesday from Adani Green Energy Limited saying it had decided to “respectfully withdraw” from the project.

A BOI official told AFP the government was yet to respond to the letter while a spokesman for Adani said the firm would make a public statement later Thursday.

The withdrawal move followed a decision by President Anura Kumara Dissanayake’s administration to revoke a power purchase agreement with Adani Group to negotiate lower energy costs.

Dissanayake’s party had strongly criticised the deal as “corrupt” and wanted it renegotiated.

Adani told the BOI that it had spent about $5 million on “pre-development activities” relating to the proposed 484-megawatt plant on Sri Lanka’s north-western coast.

“As we bow out, we wish to reaffirm that we would always be available for (the) Sri Lankan government to have us undertake any development opportunity,” Adani added.

Sri Lanka’s previous government had signed a 20-year deal to buy electricity from the Adani wind power plant at 8.26 US cents per kilowatt.

Dissanayake’s government, which came to power late last year, said it was not willing to pay more than 5.9 US cents in line with tariffs of other plants in the same area.

Sri Lanka’s cabinet last month decided to appoint a panel to “re-evaluate” the project’s construction on the country’s north-western coast.

Dissanayake won the September presidential election promising to tackle corruption and bring back stolen Sri Lankan assets said to be stashed abroad.

Industrialist Gautam Adani, the founder of the Indian conglomerate, was indicted in New York in November, accused of paying bribes to Indian government officials and hiding the payments from US investors.

Adani Group has dismissed the charges as “baseless”.

With a business empire spanning coal, airports, cement and media, Adani Group has been rocked by corporate fraud allegations in recent years.

Adani was the first foreign investor to enter Sri Lanka in the wake of a 2022 financial crash that devastated its economy.

His Mannar wind power plants were approved in February 2023 but the project had been stalled by court challenges.

A port development by Adani to construct a deep-sea terminal at the Colombo harbour is on track and is expected to be completed next month.

The US International Development Finance Corporation had initially pledged $553 million for Adani’s West Container Terminal in Colombo, but later pulled out.