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Adani quits $442 mn Sri Lanka power project
Sri Lanka's Board of Investment (BOI) said on Feb.13 it had received a letter from Adani Green Energy Limited saying it had decided to "respectfully withdraw" from the project.
Adani Green Energy Ltd logo. / Adani website
Indian conglomerate Adani Group has withdrawn from a troubled $442 million wind power project in Sri Lanka after the island nation's government sought to renegotiate the deal.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 on Feb.13 it had received a letter 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 sudden pull-out by the Indian company, which had pledged last month to invest up to $1 billion on renewable projects in Sri Lanka.
Adani said in a statement on Feb.13 that they were pulling out of the wind power project as well as two other projects to set up power transmission lines.
"We remain committed to Sri Lanka and are open to future collaboration if the government of Sri Lanka so desires," it said in a brief statement.
The withdrawal followed a decision by President Anura Kumara Dissanayake's administration to revoke a power purchase agreement with Adani Group in order 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 northwestern coast.
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.
- Legal battles -
Sri Lanka's cabinet decided last month to appoint a panel to "re-evaluate" the project's construction, which was also held up by legal challenges from environmentalist groups that said the plant would affect migratory birds.
Several others had also challenged the project over its power purchase terms. The cases are pending.
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.
A port development by Adani to construct a $700 million 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.
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