20 July, 2024

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Adani Wind Power Project Appears To Ignore The Critical Principle Of Time Value Of Money & Transparency

By Chandra Jayaratne

Chandra Jayaratne

Re Adani Wind Power Project in Sri Lanka Offers Fixed Tariff with No Changes over Next 20 years; Appears to Ignore the Critical Principle of Time Value of Money and Transparency

Newspapers report that the Managing Director of Adani Power and Adani Energy Solutions had, at a meeting with Sr Lankan Journalists at the Adani Group’s global corporate headquarters, made a statement that “ the tariff Adani has offered to Sri Lanka is fixed for the entire duration of the contract spanning 20 years” and had also “emphasized the need for transparency in tariffs, pointing out that other power companies initially quoted lower prices but increased rates later, thereby burdening the consumers.” He is further quoted as stating “Transparency is key here. If they charge a certain amount that should be the bill. There should be no hidden elements. Should we offer a fixed tariff with no changes over the next 20 years, or should we present a seemingly lower figure that could potentially double through additional charges in the future? This dilemma demands clarity from Sri Lanka. Discerning individuals already know who can deliver and within what timeframe.” He has in addition described the planned initiatives to add value to the Sri Lankan economy through a local workforce and their skills enhancement. He has gone on to assure that the rich environmental value of the migratory bird flocks will not be negatively impacted due to the use of advanced AI and other proven technologies to be adopted.

Sri Lankan Civil Society respectfully recognizes the above commitments, especially the commitments to Transparency with no hidden elements, Value Addition and Environmental concerns and call upon the Managing Director of Adani Power and Adani Energy Solutions to transparently,

* disclose the original and all amendments to the government-to-government proposals submitted along with their own environmental assessments and provide details of and rationale for all changes in price, conditions/ warranties made during different stages negotiation, until the end contract position

* all related party payments made or committed to be paid at any time throughout the contract period in Sri Lanka or overseas, by or on behalf of any Adani Group Company or on their behalf by any third party, to any of the persons or parties engaged in the contract development or in the negotiations team/process or any other Sri Lankan/Sri Lankan entity or any nominee of such persons

* Declare that up now and into the future throughout the contract period, the project related actions and transactions will not violate any regulations or laws of Sri Lanka or India

* disclose and demonstrate transparently all environmental protection measures in place, especially regarding migratory bird movements and end of project removal/safe disposal of construction material

In addition, it is necessary the Managing Director of Adani Power and Adani Energy Solutions, who is well aware of the accounting concept of “Time Value of Money,” in challenging the benefits of a fixed 20 year pricing by Adani group versus competitive offer prices of other smaller production capacity suppliers, should transparently compute and disclose publicly the respective estimated net present values of the all outgoings from the Sri Lankan state to the Adani Group project and to other competing projects separately. With all projects’ pricing being in US dollars, the exchange rate risk is already mitigated.

The total outflows to Adani Group and other competing projects can transparently be built by accurate estimation. An acceptable discounting rate can be applied in determining the respective net present values. These rates can be based on any additional country risks, local inflation and relevant energy sector related specific risks. Multiple rates of discounting may even be used for different streams of cash flows, with assumptions being transparently disclosed; and apply such discounting rate/s to the estimated streams of cash outflows to Adani and competitor suppliers (provided estimated on acceptable assumptions transparently disclosed). Such computations will impute in the net present values determined risk adjustments for anticipated price variations, especially applicable in respect of other competing offers, if their price offers are subject to permissible future adjustments.

Only by disclosing the above can the Adani Group confirm the position taken at the meeting with the journalists.

Civil Society look forward with much anticipation to the above disclosures and compliance certifications: and sincerely trust that the President, the Minister of Power and Energy, Ministry of Finance, the Auditor General, Governor of the Central Bank, the Opposition Leaders and the Committee on Public Finance will call for and evaluate the requested submissions before final green light for the Mannar Wind Power project.

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Latest comments

  • 8
    4

    Adani ha no scruples, and has Modi in his pocket.

    • 7
      3

      SJ,
      Adani is the robber baron that JR was waiting for, but 40 years late.

      • 4
        0

        oc
        This little country is too small a lake for sharks of that size.

      • 0
        1

        Chandra Jayaratne – For your kind attention
        .

        1) Is John Keells Holdings the point of reference for the Adani Group in Sri Lanka?
        .

        2) ‘The Sunday Times’ 25 October 2021
        .

        https://sundaytimes.lk/online/news-online/Indian-billionaire-Gautam-Adani-to-meet-President-today/2-1135677
        .

        “Unlike in the ECT project envisaged earlier, there is no Indian governmental role in the WCT project, with the Adani Group entering the picture as a private investor, amid questions from Sri Lankan experts on the apparent lack of transparency in how the investor was chosen.”
        .

        “As per the 35 year-long BOT agreement, the Adani Group will have majority, 51% stakes in the project, while John Keells will hold 34%, and the SLPA, 15%.”
        .

        3) Is it a coincidence that the Build-Operate-Transfer (BOT) agreement for WCT was signed on 30 September 2021 SOON AFTER Krishan Balendra’s close relative Milinda Moragoda (wife’s half-brother) arrived in New Delhi to assume duties as High Commissioner in August 2021? It is worth noting that although Moragoda’s appointment was approved by Parliament’s High Posts Committee in September 2020, he assumed duties after almost one year in August 2021.
        .

    • 3
      0

      SJ
      I think it is the other way around.
      Adani is the Dhammika Perera of India while Modi is Mara.
      Having said that we have to ask yourselves a question to clarify their true intent in Sri Lanka.
      Would Adani/Modi invest in a country that will make them lose money?
      The answer is absolutely NO.
      Therefore we have to deduce that Adani/Modi are privy to info that you and I don’t know yet, which is, that Sri Lankan polity and economy would be stable for the next 20 years in order to recover their investments.
      How do they know this? I think it is quite simple, they will put their weight behind the Sri Lankan economy to keep it stable.
      As a byproduct of the stability, Sri Lanka would not have to invite china to participate in projects. China’s presense in Sri Lanka is both a threat and a shame to India.

  • 2
    1

    Adani and Rajas acted together

  • 14
    2

    Transparency/honesty and Ranil are mutually exclusive. ………. Anything done/signed by Ranil needs closer scrutiny.

    That’s why we need another Prabakaran to save us from India and greed – including the greedy crafty Tamils who now try to profit from Prabakaran’s name …….. https://www.dailymirror.lk/breaking-news/Prabhakaran%E2%80%99s-nephew-demands-respect–for-slain-uncle-and-his-family/108-286320



    Creating Prabakaran’s daughter with AI takes the cake! ……. No wonder, a few thousands could hold off hundred-thousands for 30 long years …… Tamils are always better, smarter and more talented than the unbelievably stupid Sinhalese – even at scams.

    The truth is a hard pill to swallow ……. what to do?

    Wallow in a bit of foolish pride? …….. We build hydraulic systems 2500 years ago? …….. But then what have we done recently: won a war with a few barefoot school boys?

    I’m feeling a bit down ….. time for another parade ….. gun-salute ……. to celebrate our great victory …… achievement ……..

    Hope it makes me feel better …… a bit of ol’ upliftment ……

    Let the truth set ye free. — An old proverb, before the Bible.

  • 4
    2

    Since there is to be a Presidential election, it is best that the contract be negotiated by the administration set up after the election. The weight that Adani brings, backed up by India, is not commensurate to the negotiating abilities of Sri Lanka. It is not only Adani but any other project that involves this problem. We saw that in the case of the Port City contracts and Hambantota with the Chinese. The contracts are still undisclosed. At least, the people must know what the terms are and the terms must be discussed publicly before the project is accepted. The extent of the corruption that accompanies such projects was evident in the case of the projects undertaken by post governments. Let the new government decide on these matters than RW.

  • 2
    0

    After the recent Indian Elections Modi is rather thoughtful. Modi will drop talking about the 13th A. IF Adani is permitted to harness the Wind that blows around Mannar.
    Perhaps, this is the style of Modi. Blow hot, Blow cold…………..

  • 3
    6

    Oh boy…..Indian Billionaire Industry is now the offshore tax-free safe haven for Lankan money. Thus does India benevolently give us some flat-rate concessions whilst gamboling the money of our hardworking-suffering-Lankan-Masses on niche exclusive Western industry (from Rockets to the Sun, to Louis Vuitton). And Anant Ambani will have his lavish wedding.

  • 3
    6

    I don’t know much about Madam Blat+×÷=&%$# whoever but Adani I believe is the real fraud, then comes the Ambanis and of course there’s Sri Lanka’s very own Subashkaran! What does “Prosperity 2048” is gonna look like is beginning to take shape! Selling off a USD 90 billion economy for a mere USD 4 billion to a bunch of crooks and fraudsters. Trickle down effects are to be enjoyed by the likes of John Keellls. Then there’s plethora of the local produce of the same, from Pages to Pereras they are all the same. Not to mention the murderous Pestonjees. Jayaweeras Pathirages Dharmadasas Maharajas – the list is exhaustive and neverending…

    • 5
      1

      Sorry to disappoint you, rumor is that Prince Namal will attend Anand Ambani’s mega marriage. By the way is there anyone clean in corrupt Lanka ??? It may be less exhaustive to list the clean than corrupt.

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