Sri Lanka is set to incur billions of rupees in losses due to the deviation from the Technical Evaluation Committee (TEC)-recommended tariff for the controversial renewable energy project by India’s Adani Green Energy.
As reliably learnt by The Sunday Morning, the TEC had recommended a tariff of between 5 and 6 USD cents. However, the finally approved tariff, as announced by the Power and Energy Minister last week, was 8.26 USD cents.
Last week, the Government gave its nod for a 20-year Power Purchase Agreement (PPA) with Adani Green Energy for the establishment of wind power facilities totalling 484 MW in Mannar and Pooneryn.
The proposal, spearheaded by Power and Energy Minister Kanchana Wijesekera, received Cabinet approval during its session on Monday (6).
According to the proposal, the electricity tariff for the envisaged project is set at 8.26 USD cents per KW, with payments to be made in Sri Lankan Rupees based on the prevailing foreign exchange rate over the 20-year period.
“Considering the current exchange rate at $ 1 = Rs. 300, the energy cost translates to Rs. 24.78 per kWh. This stands in contrast to the current average energy cost in Sri Lanka, which is Rs. 39.02 per kWh,” stated the Power and Energy Minister on X.
As explained by a senior engineer attached to the Ceylon Electricity Board (CEB) who wished to remain anonymous, for the Adani Mannar site, the proposed plant capacity is 250 MW.
It will generate a minimum 1,000 million units of electricity per year, with an annual payment of 0.0826 (unit cost) x 1,000 (no. of units), amounting to $ 82.6 million.
“This is equivalent to Rs. 24.6 billion per year. It means we are paying Rs. 24.6 billion over 25 years – Rs. 611 billion at the end of the 25-year lifetime. If you compare it in today’s values (converting to Net Present Value) it comes to Rs. 244 billion, similar to paying Rs. 244 billion today. Suppose we have a saving of 2.26 USD cents per unit compared to the CEB’s proposed unit rate taken as 6 USD cents, although it is below that, then the annual saving is Rs. 7.75 billion per year. Sri Lanka will save Rs. 193.75 billion at the end of 25 years – similar to saving Rs. 77.38 billion today,” the engineer noted.
Speaking to The Sunday Morning, Power and Energy Ministry Secretary Dr. Sulakshana Jayawardena emphasised on the contrasting landscapes of India and Sri Lanka, stating that direct comparisons between the two nations were not feasible due to their distinct economic and contextual differences.
Dr. Jayawardena highlighted India’s robust economic situation, contrasting it with Sri Lanka’s uncertainties, particularly in attracting foreign investments.
He noted that while India operated on a gigawatt scale and boasted streamlined approval processes, Sri Lanka faced challenges in garnering foreign investments, with doubts lingering in the minds of potential investors.