Gautam Adani, one of Asia’s wealthiest business tycoons, has faced increasing challenges in his overseas ventures, especially with his projects in Bangladesh and now Sri Lanka. With the recent political shift in Sri Lanka, Adani’s $1 billion wind energy project could be at risk due to environmental concerns and a potential change in government policy.
New President, New Challenges for Adani Group
Sri Lanka’s new president, Anura Kumara Dissanayake, is a Marxist leader with a strong stance on national sovereignty. During his election campaign, he promised to cancel foreign projects that he deemed a threat to Sri Lanka’s energy independence, and Adani’s wind energy project was among his targets. Dissanayake has criticized the project, calling it corrupt and a risk to the country’s control over its energy resources.
This wind power project, which is supposed to generate 450 MW, has already faced pushback due to environmental concerns raised by a China-backed lobby. Dissanayake’s close ties to China only add to the uncertainty about whether Adani will be able to proceed with the project as planned.
Adani’s Billion-Dollar Bet on Sri Lanka
The Adani Group, through its subsidiary Adani Green Energy Limited, has committed to investing $1 billion in Sri Lanka’s energy sector. This investment will go towards building two wind farms in the towns of Mannar and Poonerin, with a total capacity of 484 MW. The Sri Lankan government had already signed a 20-year agreement in May 2023 to purchase electricity from Adani’s wind farms, marking the largest single foreign direct investment (FDI) in the country’s history.
In addition to the wind energy project, Adani is involved in constructing a $700 million terminal at Colombo’s largest port. These projects are critical for Sri Lanka’s energy infrastructure and economic recovery, especially given the country’s financial struggles in recent years.
Environmental Concerns and Political Pressures
A China-backed environmental lobby has actively campaigned against the wind energy project, citing threats to local ecosystems. This, coupled with Dissanayake’s criticism of the project during his campaign, has cast doubt on the future of the initiative. Dissanayake has stated that deals like Adani’s could undermine Sri Lanka’s energy independence, further fueling public opposition to the project.
However, some local business groups, like the Ceylon Chamber of Commerce, are pushing back against this narrative. They argue that foreign investments like Adani’s are crucial for Sri Lanka’s development, especially at a time when the country needs to attract more capital to rebuild its economy.
What Lies Ahead?
While Dissanayake has voiced his opposition to Adani’s project, experts believe that the new government may not completely cancel Indian investments in Sri Lanka. Instead, the President could push for modifications to the agreements to better align with his party’s policies on energy sovereignty and environmental sustainability.
For now, the fate of Adani’s Sri Lanka wind project remains uncertain, but the road ahead could be filled with challenges as political and environmental factors continue to shape the landscape.
