The Adani Group’s “back door” entry into Sri Lanka’s energy sector disrupts the country’s competitive electricity generation system, the Opposition has said, accusing the Rajapaksa government of “pampering” Prime Minister Narendra Modi’s “notorious friends”.
“It is with deep regret that we note that the Adani Group has chosen the back door to enter Sri Lanka. Avoiding competition is not something we take kindly. It hurts our battered economy, aggravates the balance of payment issues, and causes further misery to our citizens,” said Ajith P. Perera, chief executive of the Samagi Jana Balawegaya (SJB or United People’s Force), Sri Lanka’s largest opposition party.
The statement follows a recent agreement signed by India’s Adani Group to set up two renewable energy projects in Mannar and Pooneryn, in Sri Lanka’s Northern Province. The Memorandum of Understanding (MoU), which official sources confirmed was signed on March 11, 2022, has drawn attention, also for the apparent secrecy around it.
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The development came to light only after Sri Lankan newspapers reported on the deal, quoting officials in Colombo. The agreement for two-large scale renewable energy projects, with an estimated investment of $ 500 million, had been inked the same day the National Thermal Power Corporation (NTPC) of India formalised an agreement with Ceylon Electricity Board (CEB), to jointly set up a solar power plant in Sampur, in Sri Lanka’s eastern Trincomalee district. However, the agreement involving the Adani Group was not made public by either side.
“PM Modi may have given us crucial financial assistance during our current economic crisis, but that doesn’t mean our renewable energy sector’s most valuable lands and resources can be stolen for his friend Adani...The [Rajapaksa] government has many decent ways to thank PM Modi rather than pampering his notorious friends,” Mr. Perera said, adding that a global player like Adani would be “most welcome” through proper channels.
A former State Minister of Power and Renewable Energy, Mr. Perera said that over the years, Sri Lanka had gained “a good handle” on renewable energy development, establishing a “robust competitive system” to gain the best value from private investments.
“The bidding rounds run by the state-owned CEB paid off handsomely, realising 4.00 US Cents/kWh for small 10MW scale solar projects, and 6.50 US Cents/kWh for similar sized wind projects during my time in office (2015-2019). The pinnacle of renewable energy development was the realisation of 4.85 US Cents/kWh in the 100MW Mannar wind power project developed by the CEB.”
‘Violation of law’
SJB parliamentarian and economist Harsha de Silva said the agreement violated Sri Lanka’s energy laws, especially the Sri Lanka Electricity (Amendment) Act of 2013 that mandates competitive bidding for all electricity generation.
“The Mannar basin has one of the best energy yields. Giving it to an investor outside of a competitive process is a clear violation. We are talking about 500 MW in one of our best locations,” he told The Hindu.
The CEB has not yet responded to The Hindu’s request for a comment.
The recent renewable energy deals in northern Sri Lanka come months after Adani Group Chairman Gautam Adani visited Sri Lanka and met President Gotabaya Rajapaksa and discussed possible investment in the island nation’s energy sector, coinciding with Colombo’s thrust on clean energy. The projects in northern Sri Lanka are the group’s second major investment in Sri Lanka, following the West Container Terminal (WCT) Project at the Colombo Port, where it holds majority stakes.
Even in the WCT project formalised in September 2021, or the earlier intergovernmental East Container Terminal project that it replaced, the Adani Group entered as a “nominee” of the Government of India, and not through a competitive bid, sparking questions about due process.