The delay in finalising the unit cost for the proposed 500 MW wind power project initiated by India’s Adani Group has prompted officials to pay a visit to Power and Energy Minister Kanchana Wijesekera last week, as reliably learnt by The Sunday Morning.
Concerns have been raised regarding the continuous delay in negotiating the unit cost of the project, which has become a roadblock to proceeding with the project as planned.
Minister Wijesekera shared on his X account that a delegation from renewable energy companies affiliated with the Confederation of Indian Industry (CII) had visited the Ministry of Power and Energy in Sri Lanka.
The delegation’s visit, organised by the Ministry of New and Renewable Energy (MNRE) of the Government of India and the CII, had focused on strengthening India-Sri Lanka ties through cooperation in renewable energy.
Discussions during the three-day visit had covered various aspects including Sri Lanka’s renewable energy policies and plans, ongoing projects, electricity sector reforms, investment opportunities, legal framework, offshore wind development, green hydrogen roadmap, and interconnectivity.
Senior management and officials from prominent companies such as ACME Group, ReNew Energy Global, Adani Green Energy Ltd., PTC India Ltd., Jakson Group, Welspun New Energy Ltd., Sterlite Power, Nucleus Consulting and Gamification Ltd., Shakti Pumps India Ltd., and Suzlon Energy Ltd., along with representatives from the CII and the Indian High Commission in Sri Lanka, had participated in the meetings.
When contacted by The Sunday Morning, Power and Energy Ministry Secretary Sulakshana Jayawardena disclosed the ongoing struggles in negotiations, pointing out that the negotiations should be realistic.
Jayawardena highlighted the complexity of negotiating tariffs, emphasising on the importance of assessing the return on equity and ensuring alignment with project costs. He cited instances such as the Siyambalanduwa power plant, where tariffs exceed $ 8 cents, and urged for realism in tariff proposals to facilitate productive negotiations.
The Secretary also referred to the Auditor General’s report which highlighted the challenges faced by the Ceylon Electricity Board (CEB) power plant, indicating a mismatch between proposed tariffs and project feasibility. He stressed on the need for practical negotiations, expressing concern over the lack of tangible progress despite extensive discussions.
Addressing infrastructure constraints, Jayawardena acknowledged difficulties in constructing necessary facilities, hindering the implementation of energy projects. He highlighted the urgency of finding alternative solutions to prevent potential shortages, especially with only six years remaining to address the looming energy challenge.
Reflecting on past experiences, Jayawardena said: “The Government has been undertaking endeavours in solar power since 2016, culminating in recent Power Purchase Agreements (PPAs) signed until 2026.”
However, he noted delays in finalising agreements, particularly with the Adani project, necessitating further analysis and consultation.
“Despite efforts, negotiations have dragged on for over two years without reaching a conclusive outcome, exacerbating concerns over infrastructure readiness and project viability. At present, the Government is unable to solely finance development projects, highlighting the necessity of collaboration with private entities,” he said.
The CEB issued a Request for Proposal (RFP) to Adani in May 2023 and at the time the board indicated that the determination of energy purchasing prices would follow upon receiving a response from the group regarding the RFP.
Adani’s proposed 500 MW wind and solar project stands as the sole large-scale investment currently undergoing processing by the Sri Lankan Government. Adani Green Energy Ltd. (AGEL) is spearheading this investment, valued at $ 442 million and aimed at establishing 500 MW of renewable energy plants, encompassing both wind and solar technologies in Mannar and Pooneryn.
Source: themorning
