Sri Lanka’s Cabinet, chaired by President Anura Kumara Dissanayake, has revoked two Cabinet decisions related to a controversial power purchase deal with India’s Adani Group for the development of 484 MW wind power plants in Mannar and Pooneryn.

The decision comes amid a probe into U.S. allegations that Adani executives paid bribes to secure power contracts in India, charges the company has strongly denied.

Background on the Project

The power purchase agreement, originally approved in June 2024 under the leadership of former President Ranil Wickremesinghe, faced criticism on multiple fronts. Local and international stakeholders raised concerns about the project’s procurement process, citing the lack of competitive bidding and the high cost of US cents 8.26 per kilowatt-hour, which exceeded rates as low as 4.88 cents offered by local bidders.

The Cabinet’s decision on 30 December 2024 to revoke the agreement is consistent with its pledge to review and prioritize transparency in large-scale energy projects. The move formally nullifies the earlier Cabinet decision that had awarded the project to Adani Green Energy SL Limited. However, the project entirely has not been cancelled so far.

Adani Group’s Response

The Adani Group has refuted reports of project cancellation, describing them as false and misleading. In a statement issued on 24 January, the company clarified that the Cabinet’s recent actions constitute a routine tariff review under a new government, rather than outright cancellation.

Adani reiterated its commitment to investing $1 billion in Sri Lanka’s renewable energy sector and emphasized its readiness to align with the country’s updated energy priorities. The company said it remains steadfast in its goal to drive renewable energy adoption and economic growth in Sri Lanka.

Legal and Environmental Challenges

The Adani Mannar Wind Power Project has also been the subject of legal scrutiny. Environmentalist Rohan Pethiyagoda, alongside other environmental advocates and the former Bishop of Mannar, filed a petition in the Supreme Court challenging the project.

The petition raised serious concerns, including:

• Environmental risks associated with the project.
• Procedural lapses in its procurement and construction.
• The lack of competitive bidding during the awarding process.
• The project’s higher costs compared to similar renewable energy projects in the region.

Government’s Position and Next Steps

During the Presidential Election campaign in 2024, National People’s Power (NPP) candidate, incumbent President Anura Kumara Dissanayake said categorically declared that these projects in the North would be cancelled.

When the case was taken after the election, the Attorney General informed tthat the government has not taken a final decision on the project could be made until legal proceedings are concluded.

The Government has said to ensure transparency and fairness, a new Project Committee and Procurement Committee have been appointed to re-evaluate the project and provide recommendations.

The case is set for a Supreme Court hearing in March.

Meanwhile, A writ petition seeking to prevent authorities from issuing permits or approvals for the proposed wind power plant project on Mannar Island has been scheduled for hearing on 23 May by the Court of Appeal.

The petition was filed by Sanka Chandima Abhayawardena, President of the Sri Lanka Green Organization. During the proceedings, counsel for the Attorney General informed the Court that several related applications are set to be heard before the Supreme Court in March.

The Attorney General’s Department also stated that the government has not yet made a final decision on the project. Considering this, Court of Appeal Judge S. U. B. Karalliyadde scheduled the next hearing for 23 May.