Staggering $ 1.26 b loss via Adani’s wind power proposal

Monday, 17 February 2025 05:51 - - {{hitsCtrl.values.hits}}

With Indian giant Adani last week withdrawing from the proposed $ 1 billion 500 MW wind power project in Sri Lanka, analysts were quick to provide a comparative financial analysis. They claimed that if Adani’s venture went ahead, Sri Lanka would stand to lose a staggering $ 1.26 billion over the span of the project, which is 20 years.

Adani originally proposed to supply electricity at a rate of $ 0.0822 per kilowatt-hour (kWh). In contrast, local investors have come forward with a more economical offer of $ 0.0465 per kWh. This results in a price difference of $ 0.0357 per kWh. Given the 500 MW capacity operating at 40% efficiency, this price gap leads to a substantial financial burden for the Sri Lankan Government.

With Adani’s plant operating at 40% capacity, the total power generation per year amounts to 1,752,000 MWh (or 1.752 billion kWh). However, due to the higher price at which Adani was intending to sell electricity compared to local suppliers, the Government is expected to incur a significant financial burden.

“The decision to purchase power from Adani at a significantly higher rate than local suppliers could have long-term financial implications for the Government.

A loss of $ 1.26 billion over 20 years raises concerns about whether this deal is in the best interest of national economic stability. Exploring cheaper and more sustainable alternatives from local suppliers or renewable energy sources could be crucial in mitigating these financial losses,” analysts opined.

“This $ 1.25 billion loss over two decades represents a significant financial strain on the country’s economy, particularly at a time when Sri Lanka is working towards economic recovery and sustainability. If the Government opts for Adani’s proposal, it will be paying a premium for electricity that could otherwise be procured at a much lower rate through local investment,” analysts opined.

It was emphasised that the Government must revisit and evaluate the cost-benefit ratio of such energy agreements to ensure long-term fiscal responsibility and economic sustainability.

“The Sri Lankan Government must critically assess whether engaging with Adani at the proposed rate is financially justifiable, given the availability of local alternatives. A transparent and competitive bidding process, ensuring the best value for the country, is essential,” analysts opined.

By supporting local investors who offer a significantly lower price per kilowatt-hour, Sri Lanka can save over $ 62 million annually and redirect these funds towards economic development, infrastructure, and other critical sectors. The decision on this 500 MW wind power project will be a crucial test of the Government’s commitment to economic prudence and renewable energy expansion without compromising national financial stability.

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