Sri Lanka revokes power purchase deal with India's Adani

Sri Lanka has revoked a power purchase agreement with Indian conglomerate Adani Group following allegations of corruption, energy ministry sources in Colombo said on Friday.

President Anura Kumara Dissanayake's administration opened probes into the company's local projects after billionaire founder Gautam Adani was charged with bribery in the United States late last year.

The administration of his predecessor had agreed in May 2024 to buy electricity at US$0.0826 per kilowatt from an Adani wind power complex yet to be built in the island nation's northwest.

But a top energy ministry official said Dissanayake's cabinet decided this month not to proceed with the deal.

"The government has revoked the power purchase agreement, but the project is not cancelled. A committee has been appointed to review the entire project," the source told AFP on condition of anonymity.

Several activists had challenged the agreement, arguing that smaller renewable projects were selling electricity at two-thirds the price of Adani.

The proposed construction of Adani's 484-megawatt wind power plant in the Mannar and Pooneryn coastal areas is facing a separate Supreme Court challenge over environmental concerns.

An official document seen by AFP on Friday confirmed that Sri Lanka's cabinet this month decided to appoint a panel to "re-evaluate" the project's construction.

It also confirmed the withdrawal from the power purchase agreement, which the current ruling party had strongly criticised while in opposition.

Adani confirmed in a statement that Sri Lanka's cabinet had decided to "re-evaluate the tariffs approved in May 2024".

It described Colombo's decision to revoke the power purchase agreement as a "part of a standard review process, particularly with a new government, to ensure that the terms align with their current priorities and energy policies".

Shares in Adani Enterprises, the conglomerate's main listed unit, fell nearly three percent during Friday trade in Mumbai.

Dissanayake came to power in September promising to tackle corruption and bring back stolen Sri Lankan assets said to be stashed abroad.

Indian industrialist Adani was charged in the United States on November 19, accused of paying bribes and hiding the payments from US investors, according to prosecutors in New York.

Adani Group has dismissed the charges as "baseless".

With a business empire spanning coal, airports, cement and media, Adani Group has been rocked by corporate fraud allegations in recent years.

Adani was the first foreign investor to enter Sri Lanka in the wake of a 2022 financial crash that devastated the island's economy.

His firm's proposed $442 million wind power plants were approved in February 2023 but the project has been stalled by court challenges.