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Adani Green Energy, the renewable arm of billionaire Gautam Adani's conglomerate, has withdrawn from two proposed wind power projects in Sri Lanka, following the Island nation's new government deciding to renegotiate tariffs.
"Adani Green Energy has conveyed its Board's decision to respectfully withdraw from further engagement in the renewable energy (RE) wind energy project and two transmission projects in Sri Lanka," the firm said in a statement.
The company was to invest a total of $1 billion in generating electricity from wind at two projects and laying transmitting lines to take it to users.
The plan came under the scrutiny of the newly elected administration under President Anura Kumara Dissanayake who wanted to reduce electricity costs.
"However, we remain committed to Sri Lanka and are open to future collaboration if the government of Sri Lanka so desires" AGEL said.
Adani group, however, continues to be invested in a $700 million terminal project at Sri Lanka's largest port in Colombo.
AEGL was originally supposed to develop two wind farms with a total capacity of 484 megawatts in Sri Lanka's Mannar and Pooneryn regions, with an investment of $740 million.
The project, slated for completion by mid-2026, had a rough start with opposition from environmental groups and legal challenges in Sri Lanka's Supreme Court over ecological concerns.
In May last year, Sri Lanka's previous government agreed to purchase power from the proposed Adani wind plant at $0.0826 per kilowatt-hour.
The new government began investigating the contract following an indictment against the Adani group founder chairman Gautam Adani and his key associates in a US Court for allegedly paying bribes to Indian officials to secure contracts to supply renewable energy in the country.
In January, the new administration revoked Adani's power purchase and began investigations.
Thereafter it opted to review and renegotiate the terms to bring the cost below $0.06 per unit.
Unable to meet the demand, the Adani group has withdrawn from the project.
The group conveyed its decision to the Sri Lankan government on February 12 saying it learnt that a Cabinet-appointed negotiations committee and project committee would be constituted to renegotiate the project proposal.
The Board of AGEL deliberated on the issue and decided that while the company fully respects the sovereign rights of Sri Lanka and its choices, it would respectfully withdraw from the said project.