By Controversy Surrounding Adani Wind Power Project and Its Impact on Sri Lanka-India Relations
India’s Adani Green Energy Ltd. (AGEL) has officially withdrawn from two proposed wind power projects in Sri Lanka. The decision follows weeks of negotiations and scrutiny by the Sri Lankan government, which had sought to renegotiate the cost of power generation from the projects. A spokesperson for Adani Group confirmed that the company had communicated its decision to the Sri Lankan Board of Investment (BOI) through an official letter dated February 12, 2025. Despite the withdrawal, the conglomerate reiterated its commitment to Sri Lanka and openness to future collaborations.
An Adani spokesperson explained that the group withdrew from the projects as they were “financially unviable”.
The Controversy Surrounding the Project
Adani Green Energy had initially planned to invest $1 billion in wind power projects in Mannar and Pooneryn. However, in November 2024, allegations of bribery involving Adani executives surfaced in the United States, claiming that the company engaged in corrupt practices to secure power supply deals in India. Although Adani Group denied the accusations, the controversy prompted the Sri Lankan government to reassess its agreements with the conglomerate.
By January 2025, a Cabinet-appointed committee was formed to review the Adani wind power project. The government aimed to ensure that the terms of the agreement benefited Sri Lanka’s energy sector and offered competitive pricing for electricity. Amid this scrutiny, Adani Green Energy opted to withdraw voluntarily, citing respect for Sri Lanka’s sovereignty and policy decisions.
New Opportunities for Sri Lanka
While Adani’s withdrawal casts uncertainty over Sri Lanka’s renewable energy sector, it also opens the door for new investors to step in. The government now has the opportunity to attract global renewable energy firms willing to offer more competitive terms and transparent agreements. Industry experts suggest that Sri Lanka could use this moment to restructure its energy policies, encourage diversified foreign investments, and enhance domestic energy security.
Furthermore, Sri Lanka’s push for cleaner energy sources aligns with its goal of generating 70% of its electricity from renewables by 2030. This development could lead to partnerships with companies from Europe, China, and the Middle East, strengthening Sri Lanka’s position in the global renewable energy market.
Impact on Sri Lanka-India Relations
Adani Group’s exit could have diplomatic implications for Sri Lanka-India relations. India has been a crucial partner in Sri Lanka’s economic recovery, providing financial aid and investment in infrastructure projects. The Adani wind power project was perceived as part of India’s broader influence in Sri Lanka’s energy sector.
While Adani remains engaged in Sri Lanka through its $700 million investment in the Colombo Port’s West Container Terminal, its withdrawal from the wind power sector may lead to a recalibration of economic ties between the two nations. Indian businesses and investors may now adopt a more cautious approach when entering the Sri Lankan market, wary of potential policy shifts and project reviews.
Looking Ahead
With Adani Green Energy stepping away, Sri Lanka must now strategize on filling the investment gap in its renewable energy sector. The government is expected to announce revised policies to attract alternative investors while ensuring national interests are safeguarded. Meanwhile, Adani Group’s continued involvement in Sri Lanka’s port infrastructure signals that its presence in the country is far from over.
As Sri Lanka navigates this transitional phase, the way it handles future foreign investments will shape its economic stability and diplomatic relations in the region.
