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India’s Adani Group has decided to pull out of its $440mn wind power projects in Sri Lanka after the new government in Colombo launched a review of the tariffs agreed for the deal.
The Indian conglomerate headed by billionaire Gautam Adani wrote to Anura Kumara Dissanayake’s government, saying its Adani Green Energy unit would end its involvement after Sri Lanka indicated it wanted to renegotiate the projects and review a 20-year tariff agreement.
“It was decided that while the company fully respects the sovereign rights of Sri Lanka . . . it would respectfully withdraw,” said Adani in the letter sent on Wednesday and seen by the Financial Times.
The letter said the company had spent about $5mn on “pre-development activities” for the two wind farms.
Earlier Adani had told the Sri Lankan government that it would pull out of the 484-megawatt projects if Colombo did not decide on new and reasonable tariffs by the end of March, according to two people aware of the details.
Adani Green Energy confirmed its withdrawal in a statement on Thursday. There was no immediate comment from Sri Lanka’s government.
Governments in both Sri Lanka and Bangladesh have started to re-examine power projects with Adani that were signed by their predecessors.
In Bangladesh, Muhammad Yunus’s government is reviewing several energy deals agreed by the deposed Sheikh Hasina government, including a contract for Adani’s Godda coal-fired power plant to supply power across the border from India.
Since November, Adani has halved the cross-border flow of electricity from Godda amid a dispute over a backlog of overdue payments.
One of the people familiar with Adani’s projects claimed Dhaka owed the Indian group about $800mn, and is paying around $90mn a month for its current consumption and past dues, while Bangladesh puts the outstanding amount at about $550mn.
Adani did not respond to a request for comment on the dispute involving Bangladesh.
The infrastructure and energy-focused conglomerate has faced new challenges to its global ambitions since the US Department of Justice and Securities and Exchange Commission in November charged its chair and seven other executives in connection with a multimillion-dollar bribery scheme involving solar power contracts in India. Adani Group has called the accusations “baseless”.
In November Kenya cancelled Adani’s proposed deals worth $2.6bn, which included expanding the country’s busiest airport and investment in power lines.
A month after the US allegations, the group decided to drop out of a $500mn loan deal with the US International Development Finance Corporation to finance a port terminal project in Colombo, saying it would fund the project internally.
The person familiar with the group’s plans said that, despite the issues with its energy projects in Sri Lanka, Adani would continue to work on the port project.
