Adani Green Energy’s stock experienced notable fluctuations on Friday, particularly in response to emerging reports that Sri Lanka had cancelled a significant project with the conglomerate. The news sent ripples through the financial markets, leading to a sharp decline in the company's share price after initial gains.
The shares of Adani Green Energy began the trading day on a positive note, opening at Rs 1,039.45, up from the previous day’s closing price of Rs 1,021.45. Early momentum saw the stock reach a day’s high of Rs 1,065.45, prompting optimism among investors. However, the mood shifted abruptly when news broke that Sri Lanka had purportedly cancelled a major power purchase agreement (PPA) with the Adani Group. The stock price quickly reversed course, tumbling to a low of Rs 1,008, marking a decline of more than 6% from its earlier high.
The alleged cancellation of the deal stems from reports that Sri Lanka had rescinded its agreement with the Adani Group concerning a $400 million wind power project in Mannar and Pooneryn, in light of a US investigation into possible corruption. According to the reports, allegations had surfaced that executives from the Adani Group had paid bribes to secure contracts for the power supply. These claims were reported by AFP and subsequently echoed in India’s Economic Times, which fueled concerns among investors and put additional pressure on the company’s stock.
In response to the negative reports, the Adani Group issued a strong denial, seeking to quell the mounting concerns. A spokesperson for the conglomerate categorically rejected the idea that the projects in Sri Lanka had been cancelled. “Reports that Adani’s 484 MW wind power projects in Mannar and Pooneryn have been cancelled are false and misleading,” the spokesperson stated, emphasizing that the cancellation narrative was not accurate. The group clarified that the Sri Lankan Cabinet’s decision on January 2, 2025, to reconsider the tariff approved in May 2024 was part of a standard review process, which is typical when a new government assumes power. The spokesperson added that the review was an attempt to ensure that the terms of the project aligned with the country’s current energy priorities and policies, noting that such a process is common when there is a change in leadership.
This clarification from the Adani Group suggests that the issue may be more administrative than substantive. However, the uncertainty surrounding the situation continues to weigh heavily on the stock’s performance. While the company’s statement downplays the significance of the tariff review, the mere association of the project with bribery allegations has generated negative publicity, contributing to the volatility in Adani Green Energy's shares. The group’s efforts to reassure investors highlight its intent to maintain its position in Sri Lanka’s energy market, but it remains to be seen whether these statements will alleviate concerns in the long term.
The developments surrounding the Adani Group’s Sri Lankan project are not occurring in a vacuum. The conglomerate has faced growing scrutiny in recent months, both domestically and internationally, with investors increasingly attentive to potential regulatory and political challenges. These concerns are compounded by the allegations surrounding the group’s business practices, which have fueled media attention and led to further calls for greater transparency in its operations. The Adani Group’s sprawling global operations, particularly in the renewable energy sector, are often touted as key to its future growth. However, the risks associated with such high-profile projects in emerging markets, coupled with political tensions and legal investigations, have the potential to derail its ambitions.
The cancellation of this power purchase agreement, whether or not confirmed, has undoubtedly cast a shadow over Adani Green Energy’s prospects, particularly in Sri Lanka. The group’s immediate focus will likely be on restoring investor confidence and navigating any potential repercussions from the ongoing scrutiny.
Investors, analysts, and market observers will be watching closely to see how the situation unfolds, particularly in the coming weeks, as further clarity emerges on the status of the wind power projects and whether the Adani Group can successfully manage its relations with Sri Lanka’s new government. The company’s future in Sri Lanka may depend on how well it can negotiate the review process and address any lingering doubts about its business practices. Given the increasing competition in the global renewable energy sector and the growing importance of maintaining strong international partnerships, the Adani Group faces a critical test in how it handles this controversy.
The news also shines a light on the broader geopolitical dynamics at play. For Adani Group, its operations in Sri Lanka are part of a larger strategy to capitalize on the growing global demand for clean energy. As the world pivots toward sustainable energy solutions, the company’s success in foreign markets like Sri Lanka could play a pivotal role in bolstering its financial position. However, the challenges it faces—both financial and reputational—serve as a reminder of the risks that come with large-scale international projects, particularly in countries with volatile political environments.
As the situation continues to develop, the broader market will be keeping a close watch on Adani Green Energy’s responses, government interactions, and any additional reports that may further influence the stock’s performance. The company’s ability to weather this storm will likely have significant implications for its long-term trajectory in the global energy market.
