A recent audit report by the National Audit Office has raised concerns over the financial transparency of Sri Lanka’s 500 MW renewable energy project in Mannar and Pooneryn, awarded to India’s Adani Group. The report highlights that while the Sri Lanka Sustainable Energy Authority (SLSEA) had spent Rs. 261.7 million on initial development work, only Rs. 112.5 million has been recovered, leaving an unexplained shortfall of Rs. 149.2 million.
Unaccounted Funds Raise Transparency Issues
The audit report questions why SLSEA failed to recover the full amount it had invested in the early stages of the project. In a letter dated November 8, 2022, the authority formally requested reimbursement of the Rs. 261.7 million spent on preparatory work. However, subsequent financial records show only Rs. 112.5 million was recorded as recoverable, with no clear explanation for the remaining amount.
Lack of Documentation and Accountability
The report further states that no agreements or documentation justifying the reduction of Rs. 149.2 million were provided for audit review. This lack of transparency has raised serious concerns over how the financial adjustments were made and whether due process was followed in negotiations with the Adani Group.
The National Audit Office has recommended that SLSEA immediately disclose any agreements or justifications regarding the financial shortfall. It has also stressed the need for better governance in handling large-scale renewable energy projects, ensuring that public funds are properly accounted for.
Cabinet Approval and Future Implications
The project was officially handed over to Adani Group following Cabinet approval on March 15, 2022. Given the scale of investment and the strategic importance of renewable energy in Sri Lanka’s power sector, the audit findings have sparked fresh debates over accountability, financial management, and transparency in foreign investment projects.
With increasing pressure on Sri Lanka to attract foreign investors while ensuring financial integrity, the government may have to review its policies on project handovers and cost recoveries. The findings from this audit could shape future discussions on how Sri Lanka negotiates and manages large-scale energy investments.
