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Sri Lanka has revoked a power purchase agreement with Adani Group’s renewable energy unit after allegations of corruption levelled against the Indian conglomerate in the US last year that brought some of its foreign projects under fresh scrutiny.
At a cabinet meeting held last month by President Anura Kumara Dissanayake’s cabinet, minutes of which were seen by the Financial Times, the island nation withdrew the agreement with Adani Green Energy for two wind power projects, worth $442mn and called for the appointment of a committee to review the project.
The document, marked “Urgent & Confidential”, was dated January 2. News of the decision was first reported by the AFP news agency.
Adani said reports that its wind power projects in Mannar and Pooneryn had been cancelled were “false and misleading”, but confirmed that Colombo was reviewing their terms.
“The Sri Lankan cabinet’s decision to re-evaluate the tariff approved in May 2024 is part of a standard review process, particularly with a new government, to ensure that the terms align with their current priorities and energy policies,” the Indian group said. Adani added it remained committed to investing $1bn in Sri Lanka’s green energy sector.
The US Department of Justice and Securities and Exchange Commission in November filed charges against the group’s billionaire chair Gautam Adani and seven others in connection with an alleged $265mn scheme to bribe officials in five Indian states in exchange for favourable terms on solar power contracts.
The Indian group rejected the US charges as baseless, but the scandal has knocked billions of dollars off its share price. Officials in some of the countries with which it concluded contracts are now re-examining them.
Sri Lanka signed a 20-year power purchase agreement with Adani Green Energy last May for two wind power stations.
Separately, the Indian group is building a port terminal in Colombo, which was previously going to be partly financed by loans from the US International Development Finance Corporation.
When campaigning for Sri Lanka’s presidency last year, Dissanayake’s National People’s Power party questioned the terms of the power purchase agreement, which was negotiated by the former administration led by Ranil Wickremesinghe, and vowed to annul the deal.
The early January decision by Sri Lanka’s government to cancel the power purchase agreement closely followed the president’s first foreign trip, where he met Indian Prime Minister Narendra Modi.
In Bangladesh, Muhammad Yunus’s interim government, which took power in August, is appointing foreign law and audit firms to review several power deals concluded under the rule of deposed leader Sheikh Hasina, including Adani’s Godda thermal power project, Muhammad Fouzul Kabir Khan, Yunus’s power adviser, told the FT this week.
In Kenya President William Ruto tore up $2.6bn of proposed infrastructure deals with Adani after it was hit with the US bribery charges.
