- Old purchase price would have led to Rs. 500 billion loss
- Ministry awaits official intimation from Adani
- No change in commitment to Renewable Energy
The Ministry of Energy said yesterday that it has not yet responded to the letter sent by Adani Green Energy Limited (AGEL) to the Board of Investment of Sri Lanka (BOI) informing them of their decision to withdraw from the US$ 1 billion wind energy projects in Sri Lanka. The Ministry plans to write to AGEL’s local representatives tomorrow (February 17) in this regard.
Adani’s decision followed a review of the Power Purchase Agreement (PPA) by the National People’s Power (NPP) Government. A Cabinet Appointed Negotiations Committee (CANC) and a Project Committee (PC) were constituted to renegotiate the project proposal. Under the existing PPA, the Ranil Wickremesinghe administration had committed to pay US$ 0.08 (eight US Cents) per Kilowatt Hour to Adani for purchasing power from the wind energy projects in the North for 20 years, whereas the new Government wanted to bring it down to US$ 0.05 or less.
However, it has since been disclosed that US$ 0.04 has been quoted to the Indian authorities in case of power transmission following a possible grid interconnection. Moreover, Adani’s quotation was almost 77 percent more than the price quoted by a Sri Lankan renewable energy firm for the same projects.
Power experts have said that the higher tariff (purchase price) would have cost electricity consumers an additional Rs.500 billion (approx) over the next 20 years.
A senior official of the Ministry of Energy said the Government cannot agree to the rates proposed by Adani. “We clearly told them that according to the international market rates, the selling price to the Ceylon Electricity Board (CEB) should be below 5 US cents per Kilowatt. We categorically told them that their proposed price rate of 8.26 US cents is very high and they have to see the possibility of reducing it to at least 5 US cents. However, they decided to withdraw without discussing it. Therefore, we would like to see their official response within the next few days.”
“The Ministry has given all permits and maintains communications with AGEL. If they do not intend to go ahead with the project, we have to cancel their permit and use that land area for another investment. First, we have to get official communication from them,” the senior official told the Sunday Observer. He said the Government was fully committed to renewable energy, mainly wind and solar and the only issue was Adani’s high unit price.
The BOI announced on Thursday (February 13), it had received a letter from the AGEL saying it had decided to “respectfully withdraw” from the project, which involved building two wind power plants in Mannar and Pooneryn along with two transmission projects. However, the Adani Group has said that they remain committed to Sri Lanka and are open to future collaboration if the Government of Sri Lanka desires.
“The Adani Group has also shared their letter sent to the BOI among foreign news agencies and other media outlets. The Ministry of Energy has not yet responded to that letter. It had been sent to the BOI and they forwarded it to us. Basically, it is a digitally signed letter without any authentication and multinational companies usually send official, physical letters,” he said.
He said the Ministry of Energy has not been officially contacted by that particular company and the Ministry has also not officially communicated yet as it has not received an official letter. The Ministry received this letter through the BOI and “We plan to officially contact them to get their stance about the project.
The senior Ministry official said the Government has not cancelled this wind power project per se. “We are still open to discuss with them but if they want to withdraw it, we cannot stop that. We have clearly informed them about the Government’s decision on the PPA rates. A Cabinet decision has been taken so that the official path is there. A decision has also been taken to appoint a project committee.”
Asked whether the Government has decided to go for grid interconnectivity between India and Sri Lanka, the senior Ministry official said that is in the pipeline. However, this is just an understanding and both parties have agreed to see the feasibility of doing this. Sri Lanka will also have to consider factors such as national security, energy independence and cost parameters.
“We have not yet taken any final decision in this regard. We have to appoint project committees, seek Cabinet approval and we have not done that yet. If this project is financially feasible and addresses our other concerns, we can implement it in the future.”
Many countries began more intense scrutiny of the projects and investments proposed by companies of the Adani Group after the US authorities launched investigations into Adani Executives for corruption last year.
