Sri Lanka is currently facing five ongoing court cases related to the project, with the government intending to take a final decision based on the committee’s findings and legal outcomes.
Sri Lanka’s newly elected administration has announced the appointment of a committee to review the Adani wind power projects in the country, stating that the previously agreed price for electricity is not acceptable. Media Minister Nalinda Jayatissa confirmed on Saturday that while the projects in Mannar and Pooneryn will not be cancelled, the government will not proceed with the agreement at the price set earlier.
“There was no decision to cancel the Mannar and Pooneryn projects, but a committee has been appointed to review them,” Minister Jayatissa told reporters. “The committee has started its work, and once the review is completed, we will determine what changes need to be made.”
The earlier administration had agreed to purchase power from Adani’s 484-megawatt wind power project at a rate of 8.26 US cents per unit under a 20-year power purchase agreement. This agreement, announced in May 2023, triggered widespread criticism due to the high price and lack of competitive tendering. Minister Jayatissa reiterated the government’s stance, saying, “We are not agreeable to the prices put forward, so that agreement was revoked, and the committee was appointed to reassess the project pricing.”
Sri Lanka is currently facing five ongoing court cases related to the project, with the government intending to take a final decision based on the committee’s findings and legal outcomes. Concerns have also been raised by environmental groups over the project’s design, particularly regarding the lack of underground cabling in the Mannar region, which is a major migratory bird flyway.
Meanwhile, documents filed in court indicate that a cabinet negotiation committee was previously appointed to discuss the terms of the project; however, Minister Jayatissa confirmed that no negotiations had taken place to date.
Criticism over Lack of Transparency
Murtaza Jafferjee, Chairman of the Colombo-based think tank Advocata Institute, had earlier criticised the lack of transparency in awarding the project to India’s Adani Group without a competitive bidding process. He highlighted that the deal contradicts the International Monetary Fund’s (IMF) recommendations to curb corruption through competitive tendering.
“Why are we paying 8.3 cents for an untendered project?” Jafferjee had questioned. “The IMF Governance Diagnostic Report emphasises the need for competitive procurement processes. Unfortunately, Sri Lanka lacks a proper procurement law and instead operates with guidelines that are often bypassed.”
The wind power project has faced stiff opposition from various quarters, including environmentalists and local communities. Environmental groups, such as the Wildlife and Nature Protection Society and the Environmental Foundation, have raised concerns over the project’s potential ecological impact. They argue that the lack of an adequate Environmental Impact Assessment (EIA) could threaten local biodiversity, particularly migratory bird populations.
Local communities, led by the Bishop of Mannar, have also voiced their opposition, warning that the project could disrupt local industries and threaten livelihoods. President Anura Kumara Dissanayake, during his election campaign, had pledged to revisit the deal and invite global tenders for wind power development to ensure fair pricing and transparency.
Adani Group’s Response
In response to local media reports suggesting that Sri Lanka’s government has revoked the power purchase agreement, the Adani Group on Monday issued a statement denying that the project has been cancelled. The company’s spokesperson clarified that the review process is a standard procedure undertaken by the new administration.
The Sri Lankan government has too iterated that the project is under review as the price for the generated electricity is not acceptable to Sri Lanka. Government sources have clarified that the issue of cancellation has not been discussed and that this is only a review thus far.
“The project has not been cancelled,” the spokesperson said. “The government’s decision to review the process aligns with normal due diligence procedures. We remain committed to investing $1 billion in Sri Lanka’s green energy sector, fostering renewable energy and economic growth.”
However, the timing of the review coincides with an ongoing bribery probe against the Adani Group in the United States. The group faced allegations in November 2024 of making bribery payments and concealing transactions from US investors. Adani has dismissed the allegations as baseless.
Stakeholders Assured
The Sri Lankan government has assured stakeholders that the review process will be thorough and transparent. The committee’s findings are expected to influence the final decision, which could potentially lead to renegotiation or a call for new tenders.
With the Supreme Court set to hear a related case in March 2025, the decision to revoke the current agreement effectively removes the matter from judicial review. However, legal experts argue that any future agreements must comply with existing procurement guidelines to avoid further controversies.
For now, stakeholders await the committee’s recommendations, with the government emphasising its commitment to ensuring that any agreement aligns with national interests and offers the best value for Sri Lanka’s energy sector.
