According to a source privy to the correspondence, Adani Green Energy has conveyed its stance to the Sri Lankan government via a letter, affirming its readiness to invest $442 million in constructing two wind power stations in the Northern Province.

A renewed impasse has emerged in the contentious renewable energy project between Adani Green Energy and the Sri Lankan government, with the Indian conglomerate reiterating its willingness to proceed on the previously agreed terms, while Colombo maintains its demand for a significant price reduction.

According to a source privy to the correspondence, Adani Green Energy has conveyed its stance to the Sri Lankan government via a letter, affirming its readiness to invest $442 million in constructing two wind power stations in the Northern Province, specifically in Mannar and Pooneryn, at the initially negotiated tariff of 8.26 US cents per kilowatt-hour (KWh). These projects, aiming to generate 484 MW of renewable energy, were intended to bolster Sri Lanka’s energy security and contribute to its sustainability goals.

However, Sri Lanka’s Cabinet Spokesman, Nalinda Jayatissa, has firmly dismissed the possibility of proceeding without a revised pricing structure. He emphasised that the government’s stance remains unchanged, insisting on a reduction to 6 US cents per KWh, a demand that precipitated Adani’s initial announcement of withdrawal from the projects last month.

“The government’s stance on Adani’s project has not changed yet,” Jayatissa stated, underscoring the new administration’s commitment to securing competitive energy prices for its citizens. “We are open for investment. If Adani brings suitable investments for us, we are ready to discuss. But the government has an opinion on the (unit) price in the proposed wind power project. It is high.”

Revise price, says Dissanayke

President Anura Kumara Dissanayake’s government, which assumed office recently, has prioritised renegotiating key infrastructure projects to ensure fiscal responsibility and public benefit. The demand for a price reduction reflects this policy, aiming to alleviate the potential burden on Sri Lankan consumers.

“Our request is that the price revision should happen. If they come up with price revision, we can discuss. If they are not ready for price revision, then they can take a decision to give up the project,” Jayatissa explained.

The controversy surrounding the Adani projects has been multifaceted, encompassing both economic and environmental concerns. The initial approval of the 8.26 cents per unit tariff by the previous government sparked significant public debate and legal challenges. Activists filed lawsuits citing potential environmental damage and questioning the transparency of the tariff agreement.

As previously reported by OWSA, Adani Green Energy’s initial decision to withdraw from the projects followed the new government’s insistence on the lower tariff. The company, after protracted discussions and significant investment in preliminary work, found the revised pricing unacceptable, leading to the public announcement of their withdrawal.

However, the recent letter from Adani indicating a willingness to proceed on the original terms signals a potential opening for renewed negotiations. The company’s stance, as articulated by the source, is clear: “Our position is same as before. We are available to implement the project at the earlier agreed tariffs.”

Protecting public interests

Despite this overture, the Sri Lankan government remains steadfast in its position. Jayatissa reiterated that the government’s decision is driven by the need to protect public interests. “It does not mean that all the investors coming to Sri Lanka are leaving. Whoever the investor, if the burden can’t be borne by us and if the government has to pass that burden to the people, then the government will take a decision with regard to this.”

He also pointed out that President Dissanayake had already made the government’s stance clear during his visit to India, emphasising the need for mutually beneficial agreements. “We don’t depend on one company or one country. We will discuss and decide everything depending on the benefits to the public. We don’t have any other interests,” Jayatissa asserted.

The legal challenges initiated by activists, which are still pending in Sri Lankan courts, add another layer of complexity to the situation. The court’s eventual decision could significantly impact the project’s future, regardless of the outcome of the ongoing negotiations between the government and Adani.

Delicate balance

The standoff highlights the delicate balance between attracting foreign investment and ensuring that such investments align with national interests and affordability.

As Sri Lanka navigates its economic challenges, the government’s focus on securing competitive energy prices is understandable, says a clean energy activist based in New Delhi, who has requested anonymity. “However, the potential loss of a significant renewable energy project could impede the nation’s progress towards its sustainability goals,” he says.

The source said that the coming weeks will be crucial in determining the fate of the Adani wind power projects. Whether the two parties can bridge the gap and reach a mutually acceptable agreement remains to be seen. The Sri Lankan government’s insistence on price revision and Adani’s re-affirmation of the initial terms, clearly sets the stage for a tense negotiation period, he says.