On Friday, as per the sources of the energy ministry in Colombo, a power purchase agreement with Indian conglomerate Adani Group was cancelled by Sri Lanka following allegations of corruption. The administration of President Anura Kumara Dissanayake has launched an investigation into the company's local projects after allegations of bribery surfaced in the United States late last year against billionaire founder Gautam Adani.

His predecessor's administration agreed in May 2024 to buy electricity from the Adani wind power complex being built in the northwest of the island nation for US$0.0826 per kilowatt. However, a top official in the Energy Ministry said that Dissanayake's cabinet decided not to sign the deal earlier this month.

"The government has revoked the power purchase agreement, but the project is not cancelled. A committee has been appointed to review the entire project," the source told AFP on condition of anonymity.

Several activists had opposed the agreement, contending that smaller renewable energy projects were offering electricity at just two-thirds of the price proposed by Adani.

The planned construction of Adani’s 484-megawatt wind power plant in the coastal areas of Mannar and Pooneryn is also facing a separate challenge in the Supreme Court due to environmental concerns.

An official document reviewed by AFP on Friday revealed that Sri Lanka’s cabinet recently decided to establish a panel to “re-evaluate” the project’s construction. It also confirmed the government’s withdrawal from the power purchase agreement, a deal the current ruling party had vocally criticised while in opposition.

Sri Lankan President Dissanayake, who assumed office in September, had pledges to combat corruption and recover stolen national assets reportedly hidden overseas.

Meanwhile, Indian industrialist Gautam Adani was charged in the United States on November 19. Prosecutors in New York accused him of paying bribes and concealing the transactions from American investors.

The Adani Group has rejected the allegations, describing them as "baseless."

With a sprawling business empire including coal, airports, cement, and media, the group has faced significant corporate fraud accusations recently.

Adani was the first foreign investor to venture into Sri Lanka following the island nation’s 2022 financial crisis, severely impacting its economy.

The company’s proposed $442 million wind power projects received approval in February 2023. However, the initiative has been delayed due to ongoing legal challenges in court.