Adani Green Energy Ltd (AGEL) are reportedly withdrawing from their two proposed wind energy projects in Sri Lanka valued at approximately $1 billion. This follows the Sri Lankan government’s attempt to renegotiate the terms of the power purchase agreement with a significant reduction in the initially agreed tariffs.
In a letter to the Chairman, Board of Investment, Sri Lanka, AGEL stated, “It was understood that another Cabinet appointed negotiations committee and Project Committee would be formed to renegotiate the project proposal. This aspect was taken into consideration at the Board of our company when making the decision to withdraw from the project.”
The projects, located in Mannar and Pooneryn in Sri Lanka’s north, were initially approved in February 2023. AGEL had committed to constructing wind power plants with a total capacity of 484 megawatts, a massive investment in Sri Lanka’s renewable energy sector. The original deal had the power purchase tariff at 8.26 cents per kilowatt-hour for 20 years.
But the new government led by President Anura Kumara Dissanayake wanted to renegotiate the terms of the deal, with a view to reducing the tariff below six cents a kilowatt-hour. This move prompted AGEL to back out, invoking respect for the sovereign choice of Sri Lanka.
In spite of such a debacle, the Adani Group has other ventures in Sri Lanka, such as a $700 million terminal venture. the largest port of Colombo. The group’s withdrawal from the wind power ventures highlights the complexity that faces multinational companies in dealing with evolving regulation and litigation in overseas markets.
Sri Lanka, facing economic problems and the necessity to develop its capacity in renewable energy, is currently seeking alternative investors to tackle its growing energy needs. This comes against the backdrop of controversy in the legal circles surrounding the Adani Group. Gautam Adani and others. were charged by U.S. authorities in November 2024 with offering bribes to secure power supply contracts. The charges prompted various countries, including Kenya, to reevaluate their relations with the group, even if the bribery accusations were dropped by newly elected President Donald Trump.
