Key Highlights:
- Sri Lanka Cancels Power Purchase Agreement: The government has revoked its agreement to buy power from Adani’s proposed 484 MW wind power project due to corruption allegations.
- Project Under Review: While the contract is terminated, the project itself is not canceled, pending a government review.
- Adani Group Denial: The conglomerate dismissed the cancellation reports, stating the review process is standard under the new administration.
The Story in Detail:
In a major development, Sri Lanka’s government, led by President Anura Kumara Dissanayake, revoked a power purchase agreement with the Adani Group. This move follows investigations into corruption allegations, including charges against Adani’s founder, Gautam Adani, in the United States.
Background of the Project
- Original Agreement: Signed in May 2024 by the previous administration to purchase electricity at $0.0826 per kWh.
- Proposed Development: Adani planned to build a 484 MW wind power facility in Mannar and Pooneryn with a $442 million investment.
- Local Opposition: Activists criticized the agreement, citing higher costs compared to smaller renewable energy projects.
Sri Lanka’s New Decision
- The agreement was canceled, though a committee will review the project for compliance with new priorities and energy policies.
- Legal and environmental challenges remain, including a Supreme Court case concerning the project’s ecological impact.
Corruption Allegations
- In November 2024, Gautam Adani faced accusations in the U.S. of bribery and concealing payments from investors.
- President Dissanayake has since emphasized combating corruption and ensuring transparency in agreements signed during Sri Lanka’s financial crisis.
Adani Group’s Response
- The company termed the cancellation reports “false and misleading.”
- It stated the review aligns with the government’s standard policy changes and reiterated its $1 billion commitment to Sri Lanka’s green energy sector.
Spokesperson’s Statement:
“The Sri Lankan Cabinet’s decision on January 2, 2025, to reevaluate the May 2024 tariff is routine and ensures alignment with new energy strategies.”
Implications of the Revocation:
- Energy Policy Shift: Sri Lanka appears focused on revisiting large contracts to balance costs and environmental concerns.
- Challenges for Foreign Investors: The review may prompt international investors to approach Sri Lanka cautiously, given past turmoil.
- Adani Group’s Image: Ongoing allegations and project reevaluations pose reputational risks for the conglomerate.
Conclusion:
As Sri Lanka reevaluates major energy projects under its new administration, the fate of Adani Group’s wind power plans remains uncertain. Amidst allegations and legal challenges, this development underscores the complexities of balancing energy needs, environmental sustainability, and governance reforms.
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