- SLSEA reviewing agreements to determine Govt.’s contractual obligations
- Energy Ministry receives letter from Adani Green Energy seeking reimbursement
The Sri Lanka Sustainable Energy Authority (SLSEA) has launched a legal review of its agreements with India’s Adani Green Energy Ltd. (AGEL), weighing whether the Government must repay millions spent during the early stages of the cancelled wind and solar project.
At the same time, the SLSEA is preparing to tender new renewable energy capacity, aiming to boost national energy security and meet ambitious green targets.
Reviewing Adani costs
SLSEA Chairman Prof. Wijendra J. Bandara confirmed to The Sunday Morning that the authority was analysing contracts and Memoranda of Understanding (MOUs) signed between Sri Lanka and AGEL at present. The goal is to determine whether the Government is contractually obligated to reimburse AGEL for preliminary expenses, estimated to amount to several million US Dollars.
“We are carefully analysing all related agreements entered into between Sri Lanka and Adani Green Energy to determine if any payment is due,” Prof. Bandara said.
He noted that, so far, no formal reimbursement request had been made by AGEL. However, based on a direction from the Secretary to the Ministry of Energy, the SLSEA’s legal office is preparing to deliver its findings to Cabinet, as any disbursement would require full Cabinet approval.
At issue are early-stage costs AGEL and its consultants incurred during feasibility studies, site investigations, environmental assessments, and logistics – one notable payment being a $ 3 million facilitation fee paid to the SLSEA.
“If there is any payment, it will be done only through Cabinet approval,” a senior Energy Ministry official told The Sunday Morning.
Unpacking the project’s origins
In March 2022, under the previous administration, Sri Lanka signed an MOU with AGEL to build a combined wind and solar complex delivering 500 MW capacity – comprising 350 MW wind in Mannar and Pooneryn, and 150 MW solar – at a total cost of $ 442 million. The project received provisional regulatory approval under Sections 16 and 17 of the SLSEA Act.
A high-level meeting in 2023 between Sri Lankan energy officials and Adani Transmission CEO Anil Sardana reaffirmed a commitment to complete the plant by December 2024. However, factors including environmental objections and procedural irregularities began surfacing.
Environmental groups flagged potential threats to local wildlife and an aviation corridor, while Opposition lawmakers and civic bodies raised red flags over the lack of competitive bidding. A Supreme Court petition was filed by the Wildlife and Nature Protection Society (WNPS) and other groups, citing procedural breaches and sustainability concerns.
With the 2024 election of President Anura Kumara Dissanayake’s National People’s Power (NPP) Government, the project underwent renewed scrutiny. The new leadership reiterated campaign promises to pursue transparent, competitive procurement and challenged the agreed tariff of $ 0.0826 per kWh as unreasonably high.
Despite negotiations, the stalemate prompted AGEL to formally withdraw in February this year. This exit was confirmed to the Board of Investment via a letter dated 12 February and subsequently communicated through the Energy Ministry.
Following AGEL’s withdrawal, the plaintiffs in the Supreme Court petitions moved to withdraw their challenges, which formally ended the legal proceedings in March.
Tendering fresh capacity to national grid
In parallel with the legal review, Prof. Bandara told The Sunday Morning that the SLSEA would “go for a tender for a new project to add to the grid”. This tender, he said, would be issued through a transparent, competitive process, marking a notable departure from the push-forwards of the previous administration.
While precise details of the new tender remain pending, the SLSEA and the Ceylon Electricity Board (CEB) will aim to target utility-scale renewable capacity with a 20-year Power Purchase Agreement (PPA).
The move to tender new capacity comes against mounting pressure from nearly 50 privately-led renewable developers awaiting project clearances. A consortium of 43 developers recently petitioned President Dissanayake, expressing concern about policy delays that have stalled projects covering over 3 GW of potential capacity and $ 3.5 billion in committed investments.
Officials suggest the new tender aims to send a strong policy signal that the Government is intent on fast‑tracking solar and wind projects, while avoiding pitfalls that undermined the Adani Green effort.
Legal review’s wider implications
As reliably learnt by The Sunday Morning, the SLSEA’s audit of the AGEL contracts will examine not only payment obligations but also compliance with procurement norms, such as whether Cabinet-Appointed Negotiating Committees (CANCs) and a project committee were properly constituted, as mandated under Section 43 of the Electricity Act.
A letter dated 18 October 2022 from the then CEB Chairman had flagged several lapses, approvals, tariff pricing authority, and committee appointments among them.
It is also learnt that if the agreements are found to contain indemnities or compensation clauses, there may be financial repercussions for the Treasury. If not, it would reinforce the Government’s position that cost recovery is not warranted.
The unfolding saga carries domestic and regional diplomatic weight. With India emerging as one of Sri Lanka’s primary development and investment partners, how the Government manages this exit could impact investor sentiment. While President Dissanayake’s administration remains openly supportive of energy sector investment, it is also keen to establish clean, tariff-based, and competitive entry standards.
The SLSEA’s tender announcement will likely align with the timeline of the final legal opinion and Cabinet review. An official within the Energy Ministry confirmed to The Sunday Morning that “no decisions will be made until we complete the legal review and Cabinet deliberation”.
Prof. Bandara noted that the tender would include clear tariff and procurement guidelines, supported by the SLSEA’s data on grid capacity and pricing models. The offer is expected to be modular, encouraging multiple developers to bid for separate regional packages, possibly extending to solar rooftop, floating solar, or wind clusters.
When contacted by The Sunday Morning, Ministry of Energy Secretary Prof. Udayanga Hemapala, confirmed that the ministry had received a letter from Adani requesting reimbursement.
“Technically, we are not legally obligated to make any payment. However, since it was our decision to cancel the project, we are currently reviewing the matter to determine whether it would be appropriate to reimburse a portion of the expenses they incurred in dealings with the Government. The matter is still under consideration,” he stated.