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Adani Green Energy (NSE:ADNA) has decided to pull out of two wind power projects in Sri Lanka, the company announced on Thursday. The withdrawal comes after the Sri Lankan government expressed intentions to reduce the cost of the power produced by these projects.
Two weeks prior, officials in Colombo indicated they were in discussions with the Adani Group to lower the price of electricity from the proposed projects, aiming to cut the cost to approximately $0.06 per kilowatt-hour or less, down from the initial $0.08.
According to Reuters, the review of Adani Group’s ventures in Sri Lanka was prompted by allegations made in November by U.S. authorities, who accused Gautam Adani and other executives of engaging in a bribery scheme to secure power supply deals in India. The Adani firm has refuted these claims. Despite the controversy, last month saw the commencement of negotiations to reduce the power costs of the projects, which are estimated to have a combined value of $1 billion.
However, an Adani spokesperson has stated that the projects were deemed "financially unviable," leading to their withdrawal. The company communicated its decision to the chairman of Sri Lanka’s investment board in a letter, explaining that a new negotiations committee and project committee would likely be formed to renegotiate the project proposal.
The letter, dated Wednesday and seen by Reuters, emphasized Adani Green’s respect for Sri Lanka’s sovereignty and its right to make decisions, but confirmed the company’s respectful withdrawal from the projects.
Adani Green reiterated its commitment to Sri Lanka in a statement on Thursday, expressing willingness to collaborate on future ventures if the government in Colombo is interested. The investment board of Sri Lanka has not provided any comments, and the secretary of the power ministry was not immediately available for a statement.
The now-abandoned collaboration with Adani Green was set to see the construction of two wind power projects in the northern regions of Mannar and Pooneryn, along with two transmission projects.
The Adani Group also remains involved in the development of a $700-million terminal project at Colombo’s largest port. Facing an economic crisis in 2022 that led to severe power blackouts and fuel shortages, Sri Lanka has been actively pursuing renewable energy projects to mitigate the impact of rising imported fuel costs.
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