Adani’s global expansion faces scrutiny as company pulls out of Sri Lanka’s wind energy project

Adani Green Energy, part of Indian billionaire Gautam Adani’s conglomerate, has decided to withdraw from its controversial wind energy project in Mannar, Sri Lanka. The decision to pull out of the 484-megawatt project highlights deeper issues surrounding foreign investments in Sri Lanka, exposing the country's vulnerability to geopolitical maneuvering. India’s reliance on private companies like Adani to extend its influence in the region has raised concerns, as it blurs the line between corporate ventures and diplomatic strategies. This move has sparked significant backlash, reflecting growing unease over the role of foreign corporate interests in Sri Lanka’s development.

The Adani Group has become a key player in the global energy sector, with investments spanning Sri Lanka, Bangladesh, and Kenya. However, recent developments surrounding its projects in these countries have revealed the complexities of balancing corporate ambitions, geopolitical interests, and growing opposition in the Global South. From its withdrawal from Sri Lanka’s controversial wind energy project to disputes over power deals with Bangladesh and Kenya, Adani’s global expansion faces mounting challenges.

Adani’s controversial wind energy project in Sri Lanka

One of the most notable developments in Adani’s international portfolio was its ambitious wind energy project in Mannar, Sri Lanka. The project, which was expected to generate 484 megawatts (MW) of wind power, has faced significant pushback from various quarters, ranging from local environmentalists to political opposition parties. Initially approved by the Gotabaya Rajapaksa administration in 2022, the project quickly became embroiled in controversy due to a lack of transparency in the selection process.

The successor Wickremesinghe administration moved the project forward despite serious concerns raised by the political opposition over the apparent lack of due process and transparency, as well as from Mannar residents and activists who flagged potential damage to a key aviation corridor, among other environmental risks, and challenged the project in Sri Lanka’s Supreme Court.

Regardless, the Ranil Wickremesinghe administration went ahead with the project amid questions from corruption watchdogs. When the Adani Group came under the global spotlight in early 2023, and its stocks plummeted in the wake of U.S. short seller Hindenburg accusing it of pulling the “largest con in corporate history,” then Foreign Minister of Sri Lanka Ali Sabry said the Wickremesinghe administration was “very, very confident” about the future of the project, which it saw as a “government-to-government” deal with India.

In the case of the Mannar wind power project, it has attracted particular scrutiny due to allegations of nepotism. Critics claim that the project was awarded to the Adani Group through undue influence from high-ranking officials. Former Foreign Minister Ali Sabry has denied these allegations, emphasizing that the process was transparent and that the selection of the Adani Group was based on a government-to-government initiative. Sabry pointed out that the Indian government had identified Adani as a suitable partner, and Sri Lanka had conducted its own feasibility studies before proceeding with the deal.

However, opposition politicians and civil society groups have raised concerns about the involvement of Adani in Sri Lanka’s renewable energy sector. Some argue that awarding such high-profile projects to a company embroiled in corruption allegations could tarnish Sri Lanka’s international reputation and deter other potential investors.

Further complicating matters, Sri Lanka’s current political landscape is increasingly focused on addressing corruption. With a new administration in power, led by President Anura Kumara Dissanayake, there were increasing calls for scrutiny of all major contracts, particularly those involving foreign entities. In September last year, Dissanayake promised to cancel the “corrupt” project in the run-up to the elections.

In a letter to Sri Lanka’s Board of Investment (BOI) this week, Adani Green Energy informed its decision to withdraw from the project, citing the Sri Lankan government’s intention to renegotiate the terms of the deal. Adani’s executives had engaged in talks with officials from the Ceylon Electricity Board (CEB) and other ministries in Colombo, only to be informed that new committees would be established to review the project proposal. After careful deliberations, Adani Green Energy decided to “respectfully withdraw” from the venture, despite having already spent $5 million on pre-development activities, including obtaining necessary clearances and securing land.

The wind energy project had been approved under a government-to-government initiative between Sri Lanka and India. Adani Group had committed $442 million in investment and was set to enter a 20-year power purchase agreement (PPA) to supply renewable energy to Sri Lanka. However, environmental concerns regarding the potential impact on local bird corridors and fishing communities, as well as public protests from local residents, complicated the project further. Despite these challenges, Adani Green expressed its openness to future development opportunities in Sri Lanka if the government decided to involve the group in new projects.

Meanwhile, in the wake of the decision to withdraw its wind energy project from Sri Lanka, it was reported that both the Indian side and Sri Lankan government had decided to enter into another round of discussions next week to address concerns and see if a mutual decision can be reached to continue discussing the implementation of the wind energy project in Mannar and two other transmission projects in the country.

Sri Lanka and India have already held 14 rounds of discussions over the implementation of the project with the previous government, with the Indian side venting its frustration at the delay in seeking approvals.

However, when President Anura Kumara Dissanayake visited New Delhi recently, he informed Indian officials that his government was willing to discuss the Adani project, but the tariff rates quoted by the company had to be reduced. Both parties had then agreed to discuss the matter further.

The Adani Group is also developing a terminal at the Colombo port together with the Sri Lanka Ports Authority (SLPA) and John Keells Holdings. In December, Adani Ports and Special Economic Zone Ltd withdrew its request for a $553 million loan from the U.S. International Development Finance Corporation (DFC) for the upcoming terminal.

Adani’s role in Bangladesh

In Bangladesh, the Adani Group has been heavily involved in the energy sector through its $2 billion Godda Power Plant in India, which supplies electricity to Bangladesh under a long-term contract. The 1,600 MW coal-fired power plant, which commenced operations in 2023, is a critical component of Bangladesh’s energy strategy, meeting around 10% of the country’s electricity needs.

Under the terms of a power purchase agreement (PPA) signed in 2017, Adani agreed to supply electricity to Bangladesh in exchange for monthly payments between $90 million and $100 million. However, Bangladesh has struggled to meet these payment obligations due to a severe foreign exchange shortage, resulting in outstanding dues that now exceed $800 million. As a result, Adani halved the supply to Bangladesh in October 2024, causing disruptions to the energy supply. Despite this, Bangladesh continued to insist that Adani maintain the reduced supply.

The situation in Bangladesh has been further complicated by allegations of non-compliance with the terms of the agreement. Bangladesh has accused Adani of withholding tax benefits related to the power purchase agreement, prompting the government to review the terms of the deal. While Adani has insisted that it has upheld all contractual obligations, the situation remains tense, with Bangladesh grappling with its financial difficulties and reliance on foreign energy supplies.

The ongoing dispute between Bangladesh and Adani highlights the vulnerabilities of smaller countries when negotiating energy deals with large multinational corporations. It also illustrates the growing trend of backlash against foreign investors who are perceived as exploiting these countries' economic challenges for their own benefit.

Kenya’s cancellation of Adani deals

Kenya represents another country where Adani Group’s ventures have faced challenges. In 2023, President William Ruto’s government canceled two major deals that had been signed with Adani Group, both of which involved infrastructure projects critical to the country’s economic development. The first deal, valued at $1.85 billion, involved upgrading Kenya’s Jomo Kenyatta International Airport, while the second deal, worth $736 million, was for the construction of power transmission lines.

These projects, however, were met with widespread opposition in Kenya. Concerns over corruption, transparency, and the potential loss of jobs at the airport led to widespread protests. Workers at the airport went on strike, fearing the potential for large-scale job cuts as part of the proposed project. Furthermore, the lack of local consultation and the perceived involvement of Adani in high-profile infrastructure projects raised questions about the long-term benefits of such investments for Kenya’s people.

The cancellation of these deals in Kenya follows a broader trend in the Global South, where countries are increasingly asserting their rights to scrutinize foreign investments and demand better terms. The backlash against Adani Group’s projects, particularly those in Kenya, Sri Lanka, and Bangladesh, signals growing resistance to foreign corporate influence in critical sectors such as energy and infrastructure.

Adani Group’s troubles extend beyond its energy projects. The group has been accused of corruption, including a high-profile bribery case in the United States, where Gautam Adani, along with other executives, was indicted for allegedly offering bribes to Indian officials in exchange for favorable treatment of solar projects. These accusations, coupled with the group’s falling stock prices following a report by the U.S. short-seller Hindenburg Research, have added to the growing scrutiny of Adani’s global operations.

The Adani Group’s experiences in Sri Lanka, Bangladesh, and Kenya offer valuable insights into the evolving dynamics of foreign investments in the Global South. While multinational corporations like Adani can provide much-needed capital and expertise to developing countries, they also bring with them complex challenges related to political influence, transparency, and environmental concerns. As countries in the Global South become more assertive in protecting their sovereignty and national interests, companies like Adani will need to adapt their strategies to build trust and ensure that their investments are aligned with local priorities.

Adani’s global expansion will likely continue, but the company will face increasing challenges in navigating a geopolitical environment where local communities, political opposition, and corruption watchdogs are demanding more accountability from foreign investors.