In a significant move, the Sri Lankan government has revoked a power purchasing agreement with Indian conglomerate Adani Group, citing allegations of corruption. This decision comes after billionaire founder Gautam Adani was charged with bribery in the United States late last year.The agreement, whichh was signed in May 2024, stipulated that Sri Lanka would purchase electricity from Adani’s wind power complex at a rate of US$0.0826 per kilowatt. However, the deal has been marred by controversy, with several activists challenging the agreement on the grounds that smaller renewable projects were selling electricity at significantly lower rates.According to a top energy ministry official, the cabinet of President Anura Kumara Dissanayake decided earlier this month not to proceed with the deal. While the project itself has not been canceled, a committee has been appointed to review the entire project and assess its viability.The proposed construction of Adani’s 484-megawatt wind power plant in the Mannar and Pooneryn coastal areas has also faced opposition from environmental groups, who have raised concerns about the project’s potential impact on the region’s ecosystem. The project is currently facing a separate Supreme Court challenge over environmental concerns.The Sri Lankan government’s decision to revoke the power purchasing agreement is seen as a significant step towards addressing concerns around corruption and transparency. President Dissanayake came to power in September promising to tackle corruption and bring back stolen Sri Lankan assets said to be stashed abroad.The Adani Group has dismissed the charges against its founder as “baseless.” However, the company has faced numerous allegations of corporate fraud in recent years, which have raised concerns about its business practices.The Adani Group was the first foreign investor to enter Sri Lanka after the country’s 2022 financial crash, which devastated the island nation’s economy. The company’s proposed $442 million wind power plants were approved in February 2023, but the project has been stalled by court challenges.As Sri Lanka continues to grapple with the challenges of rebuilding its economy, the government’s decision to revoke the power purchasing agreement with Adani Group is seen as a positive step towards promoting transparency and accountability.The committee appointed to review the project will assess its viability and determine whether it aligns with Sri Lanka’s energy needs and priorities. The government has also indicated that it will consider alternative renewable energy projects that can provide electricity at lower rates.Here’s a reaction from an economist :“The decision by the Sri Lankan government to revoke the power purchasing agreement with Adani Group is a setback for India’s efforts to strengthen economic ties with its neighbors.While I understand the concerns around corruption and transparency, it’s essential to recognize the significant investments made by Adani Group in Sri Lanka. The project was expected to provide a substantial boost to Sri Lanka’s energy sector and create jobs for locals.As an economist, I’m worried about the signal this decision sends to other Indian investors who are considering investing in Sri Lanka. It may deter them from pursuing projects in the country, which could have long-term implications for Sri Lanka’s economic growth.That being said, I also believe that the Indian government and Adani Group must take this opportunity to reflect on their business practices and ensure that they are transparent and compliant with local regulations.Ultimately, the success of India’s ‘Neighborhood First’ policy depends on building trust and stronger economic ties with countries like Sri Lanka. I hope that this setback can be overcome, and we can work towards creating a more favorable business environment for Indian investors in Sri Lanka.” – Dr. AnkurIn conclusion, the Sri Lankan government’s decision to revoke the power purchasing agreement with Adani Group is a significant step towards addressing concerns around corruption and transparency. As the country continues to rebuild its economy, it is essential that the government prioritizes transparency and accountability in all its dealings, including those related to foreign investment.Timeline of Events:May 2024: Sri Lanka signs a power purchasing agreement with Adani Group to buy electricity from its wind power complex at a rate of US$0.0826 per kilowatt.Late 2024: Billionaire founder Gautam Adani is charged with bribery in the United States.January 2025: The Sri Lankan government revokes the power purchasing agreement with Adani Group, citing allegations of corruption.January 2025: A committee is appointed to review the entire project and assess its viability.Key Players:Adani Group: Indian conglomerate founded by Gautam Adani.Gautam Adani: Billionaire founder of Adani Group, charged with bribery in the United States.President Anura Kumara Dissanayake: President of Sri Lanka, who came to power in September promising to tackle corruption.Sri Lankan Government: Revoked the power purchasing agreement with Adani Group, citing allegations of corruption.
By Anusmita Bhatta
Reporting for True To Life News Media Pvt. Ltd.