US invests $553 million in Sri Lanka’s Adani port amid growing Chinese influence

US investment

#AdaniGroup, #ASPEZ, #US, #DFC, #SriLanka, #ColomboAdaniPort, #GautamAdani

Colombo/IBNS: U.S. International Development Finance Corporation (DFC) has announced a funding of $553 million in Colombo West International Terminal Pvt. Ltd. (CWIT) – a consortium of India’s largest port operator Adani Ports and SEZ Ltd., Sri Lanka’s leading enterprise John Keells Holdings (JKH) and the Sri Lanka Ports Authority.

DFC, the U.S. government’s development finance institution, partners with the private sector to finance solutions to the most critical challenges facing the developing world.

It invests across sectors, including energy, healthcare, infrastructure, agriculture and small business and financial services.

“This is the first time that the U.S. government, through one of its agencies, is funding an Adani project, which is as a ringing endorsement of the Adani Group. It shows their confidence in the Group’s ability to invest and to create a world class container facility in Colombo Port,” Adani Ports and SEZ Ltd. said in a press statement.

The investment comes after accusations of fraud by the US-based short seller Hindenburg Research in January this year, which resulted in a substantial loss in the Adani Group’s market value and reputation.

The West Container Terminal in Colombo, a deepwater port, stands as the most substantial infrastructure investment in Asia by the US government agency and ranks among its largest worldwide, according to Bloomberg.

The Port of Colombo is the largest and busiest transshipment port in the Indian Ocean. It has been operating at more than 90% utilisation since 2021, signalling its need for additional capacity.

“DFC works to drive private sector investments that advance development and economic growth while strengthening the strategic positions of our partners. That’s what we’re delivering with this infrastructure investment in the Port of Colombo,” said DFC CEO Scott Nathan.

In 2023, the DFC’s global investments grew amounting to $9.3 billion.

By the close of the previous year, China had poured approximately $2.2 billion into the island nation, making it the largest foreign direct investor.

US officials have openly voiced concerns about the viability of Sri Lanka’s underutilized southern port in Hambantota, labeling it as unsustainable and part of what they refer to as China’s “debt-trap diplomacy.”

On the investment, DFC CEO Scott Nathan added, “Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters. DFC’s commitment of $553 million in private-sector loans for the West Container Terminal will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of our allies across the region.”

The new terminal will cater to growing economies in the Bay of Bengal, taking advantage of Sri Lanka’s prime position on major shipping routes and its proximity to these expanding markets.

U.S. Ambassador to Sri Lanka Julie Chung said, “The $553 million investment by DFC for the long-term development of the Port of Colombo’s West Container Terminal will facilitate private sector-led growth in Sri Lanka and attract crucial foreign exchange inflows during its economic recovery. Sri Lanka regaining its economic footing will further our shared vision for a free and prosperous Indo-Pacific.”

Welcoming DFC’s investment in the Adani project, Karan Adani, Whole Time Director and CEO, Adani Ports and SEZ, said, “We see this as a reaffirmation by the international community of our vision, our capabilities and our governance.”

“As one of the world’s largest port developers and operators, APSEZ brings to this project not only our proven world-class expertise but also our deep experience in infrastructure creation. When completed, Colombo West International Terminal project will transform the socio-economic landscape, not just in Colombo but across the island, through thousands of direct and indirect new employment opportunities and by massively boosting Sri Lanka’s trade and commerce ecosystem,” Karan Adani added.

Krishan Balendra, Chairperson, John Keells Holdings, said, “DFC’s investment is an endorsement of the potential of the West Terminal project and a boost for investor confidence as Sri Lanka’s economy recovers.”