Adani’s Sri Lanka journey continues with port, cement projects

Gautam Shantilal Adani’s interests in Sri Lanka may not end with the group’s intent to exit the renewable energy project in the island nation, as its two other projects – a port project and a cement unit – are still alive there.

The Colombo West International Terminal (CWIT), which was initiated in September 2021 when Adani Ports signed an agreement with the Sri Lanka Ports Authority and Sri Lankan conglomerate John Keells Holdings, pledging over $700 million to expand the capabilities of Colombo Port, is expected to be inaugurated when Indian Prime Minister, Narendra Modi visits the Island nation shortly.

Though there is no official communication yet, two projects – NTPC’s green energy project and Adani’s port project – are being considered at the bureaucratic level for the PM to inaugurate during his visit.

On whether the RE project exit could be discussed with the Indian Prime Minister is there, sources said, “it could be. Though there is no official communication about it.”

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“The recent exit of Adani from the RE project will not impact investors confidence in the island nation, as the new government had already factored in such an incident, when it took the policy decision,” Aruna Kulatunga, President of the EOI Renewable Energy Project Promoters Association, Sri Lanka, said. The association is a point of contact between the Sri Lankan government and investors.

 “Since the new government came to power in Sri Lanka, the likelihood of Adani exiting the project was factored in when taking stock of the investment strategy, as the tariff remained a contentious issue,” he told businessline, adding that “now that the government here has informed the court, chances of reviving the talks have narrowed down.”

However, a cent down is also negotiable, according to investors here, he said, adding that some also see it as a face-saving move for the government. Any climbdown from what Adani was offering — a tariff of 8 cents a unit — can be a face-saving measure for the government, he said..

Meanwhile, on the electricity policy front, Sri Lanka has been seeking stakeholders’ comments to review and revise the existing policy, which also includes the issue of tariffs. “A concern here is that the proposal suggests that the Minister for Energy has the power to decide on the tariff, which may not be acceptable to investors,” he said.

Intra-regional energy trade is good for countries in this region, he said.