
Sri Lanka has canceled a power purchase agreement with the Indian Adani Group following corruption allegations involving its founder, Gautam Adani. Energy ministry sources confirmed to Barron’s on Friday that the government of President Anura Kumara Dissanayake decided to revoke the agreement earlier this month.
Key Highlights:
- Allegations and Probes: The deal came under scrutiny after Adani was charged with bribery in the United States in November 2024. President Dissanayake’s administration launched investigations into Adani’s local projects after coming to power in September 2024.
- Project Details: The agreement, signed in May 2024, was for purchasing electricity at $0.0826 per kilowatt from a 484-megawatt wind power complex yet to be constructed in Mannar and Pooneryn coastal areas.
- Decision Details: The project is not entirely canceled, as a committee has been appointed to review the overall project, including environmental and pricing concerns.
- Challenges to the Agreement: Activists criticized the agreement for its higher pricing compared to smaller renewable projects. The Supreme Court is also reviewing environmental concerns related to the project.
- Adani’s Defense: Adani Group has dismissed all allegations as “baseless.”
Broader Context:
Adani Group was the first foreign investor to enter Sri Lanka following its 2022 financial crisis. The $442 million wind power project, approved in February 2023, has faced delays due to legal challenges.
President Dissanayake has emphasized anti-corruption and asset recovery in his administration, with the decision aligning with his campaign promises. However, the future of Adani’s investments in Sri Lanka remains uncertain amid the ongoing probes and legal reviews.