Why Sri Lanka must rethink its engagement with Adani Group

For the new government, acting upon deals with Adani is more than a legal or economic issue. It is a test of its commitment to fighting corruption

Argument
By Editor_1
Former Sri Lankan President Gotabaya Rajapaksa, Gautam Adani, Indian Prime Minister Narendra Modi -PTI
By Rathindra Kuruwita

The indictment of Indian billionaire businessman and chairman of the Adani Group, Gautam Adani, his nephew Sagar Adani, and others in a US court has raised alarm in global markets, including in Sri Lanka, where the Adani Group is deeply involved in key infrastructure and renewable energy projects.

Adani has been charged with concealing $265 million in bribes paid to Indian government officials between 2020 and 2024 to secure lucrative solar power contracts. The revelations have not only shaken investor confidence but also cast a shadow over Sri Lanka’s political and economic landscape.

Adding to the turmoil, S&P Global has downgraded the financial outlook of several Adani Group companies linked to Sri Lanka, citing governance and funding concerns. These include Adani Ports and Special Economic Zone Ltd., which is involved in the Colombo Port West Container Terminal project, and Adani Green Energy Ltd., which is spearheading the controversial Mannar wind power project.

The developments have underscored the risks of relying on a conglomerate now under international scrutiny. It raises questions about the process by which these contracts were awarded.

The indictment has reignited calls from Sri Lankan political activists and environmentalists to halt all Adani projects in the country and review the irregularities in how these deals were secured. According to Pubudu Jayagoda, education secretary of the Frontline Socialist Party, the US court order validates long-standing concerns about Adani’s dealings in Sri Lanka.

Jayagoda pointed out that Sri Lanka’s procurement guidelines emphasize transparency and competition, principles blatantly ignored in the awarding of the Colombo Port terminal and Mannar wind power projects. Reports suggest that former President Gotabaya Rajapaksa was pressured by Indian Prime Minister Narendra Modi to bypass competitive bidding processes in favour of Adani, a claim corroborated by a senior official of the Ceylon Electricity Board in 2022.

The previous administration under Ranil Wickremesinghe continued to defend Adani projects despite allegations of irregularities. Former Foreign Minister Mohamed Ali Sabry even likened the deals to “government-to-government agreements,” an assertion now questioned by activists who are demanding a full public disclosure of contract terms, project assessments, and financial details.

The Mannar wind power project has been a lightning rod for controversy, with environmentalists, including the Bishop of Mannar and academic experts, highlighting its potential ecological damage. Located on Mannar Island, a critical point on the Central Asian Flyway for migratory birds, the project threatens millions of avian species. Critics have also flagged the inadequate Environmental Impact Assessment, which they claim was manipulated to favor Adani.

The project also raises financial concerns. Petitioners in the Sri Lankan Supreme Court argue that the agreed tariff of $0.0826 per kilowatt-hour is exorbitant, compared to rates of less than $0.04 in India. They allege that such inflated costs burden Sri Lankan consumers while benefiting Adani. Moreover, questions about land leasing terms and the exclusion of alternative sites add to the lack of transparency surrounding the project.

The indictment presents a crucial opportunity for the newly elected National People’s Power (NPP) government, led by Anura Kumara Dissanayake, to address these controversies. Having campaigned on a platform of integrity and transparency, the government has pledged to scrutinize all deals signed by previous administrations, including those with Adani.

Jayagoda emphasized the geopolitical implications of these projects, arguing that they represent an economic extension of India’s influence in Sri Lanka. “In the 1980s, India intervened militarily. Now they’re doing it economically,” he said.

For many, halting Adani projects would symbolize a rejection of external pressures and a commitment to restoring sovereignty over strategic industries.

Sri Lanka is not alone in re-evaluating its partnerships with the Adani Group. Kenya recently cancelled multi-billion-dollar deals involving Adani, and an energy project in Bangladesh is under judicial inquiry.

The global scrutiny underscores the need for Sri Lanka to protect its national interests and ensure that foreign investments align with public and environmental well-being.

The US court’s indictment has placed the Adani Group at the centre of a global scandal, making it imperative for Sri Lanka to pause, reassess, and prioritize transparency. For the NPP government, this is more than a legal or economic issue. It is a test of its commitment to transparency and fighting corruption.

-thediplomat.com

 

Gautam Adani, the chairperson of Indian conglomerate, Adani Group (right) poses with Sri Lankan President Gotabaya Rajapaksa after discussing the development of Colombo Port West Container Terminal and other projects, in Colombo, Sri Lanka, October 26, 2021- X/Gautam Adani

 

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