Uncertainty still prevails on Adani’s exit from Sri Lanka RE project

The Sri Lankan Energy Ministry had reached out to the local arm of Adani Green Energy Ltd to find out the reason behind their proposed exit.

“Adani’s haved replied to our letter withing two weeks. The project is still alive,” a senior official with the Sri Lankan government said when asked now that Gautum Adani led entity has expressed its desire to exit the project, whether the project will be offered to other players.

“Also, the Ministry of Energy is waiting for the Court decisions and AGs clearance for starting the negotiations. Until we get the court clearence we cannot take any decision,” the official told businessline.

Though Adani’s in their letter have reiterated what they had communicated earlier to Sri Lanka’s Board of Investment about their intent to exit the project, they however stated that they were open to discussions. The main contention has been the tariff.

There was also a buzz that during the likely visit of Indian Prime Minister Narendra Modi to Sri Lanka next month, this issue may be taken up as it was a government to government deal, but multiple sources both in India and Sri Lanka have said that it is not on agenda.

Meanwhile, on March 14 Minister of Power and Energy of Sri Lanka, Kumara Jayakodi, was quoted as informing the Sri Lankan Parliament that “the contract for the wind power project in Mannar will be given to another company if the Adani group is not interested.”

“We are awaiting a final response from the local agent for Adani. The contract for the project will be awarded to another company if Adani decides to withdraw from it,” the Minister was quoted as saying.

Sources tracking the development in Sri Lanka said that informally the Sri Lankan Energy Ministry has reached out to other investors. What will be decided is whether this time again it will be a government to goverment deal or bids will be called, an observer said.

The Sri Lankan government is now indicating that all future RE projects, including roof top solar, would be contracted following competitive tenders, a source said.

The issue with Adani is tariff. Recently the new Cabinet of Sri Lanka has given its nod to constitute a committee that will take up the contentious issue of tariff.  The tariff which Sri Lanka was looking at was around 6 cents a unit, while the offer from Adani’s were around 8 cents a unit. 

The first letter from Adani Green addressed to Arjuna Herath Chairman Board of Investment Colombo, Sri Lanka, which created uncertainty on the future of the projects was sent in February. The second letter to the Energy Ministry has been sent recently on queries being raised by the government their.

The letter has said that Adani Green has been under protracted discussions with Ceylon Electricity Board and various Government departments since past more than two years, in respect of establishing 484 MW Renewable Energy Wind Farms at Mannar and Pooneryn, Sri Lanka, along with its associated Transmission system, as also additional 220 KV and 400 KV Transmission network expansion to carry electrons to consumptive centers in the southern part of Sri Lanka.

In its February letter, Adani Green, had said that “With the exception of Mannar Environmental approval and an associated Supreme Court case, we have procured almost all clearances. Similarly, we have worked on lands for the project, as well as associated transmission system. Till date, the company has spent about $ 5 million on the pre-development activities.”

Source: The Hindu Business Line
--Agencies