CEBEU Opposes Wind Power Deals with India’s Adani Group

Ceylon Electricity Board Engineers’ Union (CEBEU) announced that they are against the signing of two Memorandums of Understanding with Adani Green Energy Ltd., India to develop renewable energy resources
in Mannar island and Pooneryn, Sri Lanka, bypassing tender procedures and violating the principle of ‘local preference’ in-terms of developing indigenous energy sources.

Sri Lanka is blessed with excellent wind resources in the Mannar island and along the coastal strip of the country’s North-West region. This was proven beyond doubt with the commissioning of CEB’s flagship ‘Thambapavani’ 100MW Wind Power Plant in Mannar in 2020, which has shown remarkable results during its first year in operation. Maximum utilization of the wind potential in this region is essential to reach the
government’s ambition to fulfill 70% of the country’s energy needs through renewable energy sources by 2030 at an affordable cost.

The levelized cost of Thambapavani project is Rs. 8.90 per unit of electricity generated including the cost of debt servicing. The most recent tender for Wind power generation in Mannar island was awarded at Rs.
9.45 per unit, while the most recent other area tenders were awarded at Rs. 13 per unit in the areas of Chilaw and Trincomalee.

In this context, CEBEU highlighted that offering Sri Lanka’s prime locations for wind power generation to foreign investors without following due procurement process will be detrimental to the national
interests, and as a result, the full financial benefit of indigenous resources will not be gained by the nation.

Any move to offer the Adani Group a Power Purchase Agreement (PPA) with a US Dollar denominated tariff, will result in more foreign currency outflows in the decades to come, resulting in the same consequences that
we face today with fossil fuel based power generation.

Since renewable energy based power purchase agreements are typically 20 years or longer in nature, CEB will be liable to pay the PPA holder in foreign currency for freely available wind resources in the country,
while absorbing the exchange rate losses due to rupee depreciation.

Therefore, CEBEU urges the government to disclose the full details of the Memorandums of Understanding already signed between the two parties.
Furthermore, CEBEU urges the government to uphold the principle of ‘local preference’ when developing indigenous energy sources, as the union believes that local entrepreneurs are fully capable of implementing wind and solar based power generation in the country. Promoting local investment will further develop local expertise in the field of renewable energy including plant designing, operation and maintenance.

Though foreign investment is an important element in the struggle to overcome the present economic crisis, CEBEU states that local investment and low-cost funding through donor agencies/bilateral agreements should be encouraged to the maximum extent before going for long-term commitments for power purchases with US Dollar terms.