Adani’s Mannar wind power deal on ropes as much cheaper bids emerge

Thursday, 27 June 2024 02:13 - - {{hitsCtrl.values.hits}}

Open tender on CEB’s 50 MW wind power plant in Mannar draws bids quoting US cents 4.88 per kWh which is 66% lower than Adani’s cost of US cents 8.26
Environmentalist and public policy advocate Rohan Pethiyagoda questions: To whose pocket is over Rs. 300 billion or 66% extra going?

The Ceylon Electricity Board was yesterday compelled to open the ‘second envelopes’ of the international competitive bids for a 50-megawatt wind power plant to be constructed in Mannar. The bids, called under the ‘two-envelope’ system, closed on 9 May.

The first envelopes, containing the technical details were opened and evaluated immediately after the closing of bids, but the opening of the second envelopes was inexplicably delayed until yesterday.

CEB sources told the Daily FT that five bids were received, only three of which were prequalified in the technical evaluation. The prices quoted by these three parties (WindForce, Vidullanka Consortium and Lakdhanavi) had been US cents 4.88, 4.98 and 5.90 per kilowatt hour, respectively.

By comparison, the Government has proposed to pay Adani Green Energy Ltd.’s US cents 8.26 per kilowatt hour, which is 66% higher than the lowest bid received by the CEB.

Writing to the Daily FT on 14 May, environmentalist and public policy advocate Rohan Pethiyagoda observed: “The prices quoted in those two-envelope bids will be read out only about a month from now, but I will eat my hat if at least some of those bids don’t fall below the USD cents 8.26 the Government is paying Adani. And remember, a 50 MW project is much smaller than Adani’s 250 MW. It doesn’t enjoy the economies of scale and all the breaks that Adani is getting from the Government.”

Speaking to the Daily FT yesterday, Pethiyagoda said: “These prices, obtained through open competitive bidding, make it clear that the Government is planning to pay Adani 66% more than the going rate for wind power. The question we should be asking is, into whose pocket is that 66% going? Remember, it adds up to over Rs. 300 billion. That’s more than our annual national education and higher education budget combined, suggestive of corruption on an industrial scale. It underlines the fact that those of us who opposed this project from the outset were right. The entire cabinet now has egg on its face. Shame on them.”

The Daily FT understands that the six-week delay in opening the second envelopes finally came to an end yesterday after the Asian Development Bank had indicated that its $ 100 million Power Sector Reforms and Financial Sustainability Program would be put on hold unless the bids were opened.

In a related development, the Wildlife and Nature Protection Society has petitioned the Supreme Court to stop the Adani project on environmental grounds. Pethiyagoda too, together with the Bishop of Mannar and Professors Nimal Gunatilleke and Sarath Kotagama, has lodged a fundamental rights case on the basis that the deal lacks transparency, claiming that the Government is planning to award the multibillion-dollar project to Adani based on an unsolicited bid and at a grossly inflated price.