Sri Lanka (Commonwealth Union)_ Billionaire Gautam Adani’s conglomerate has announced that it will no longer seek funding from the US government for its ambitious Colombo Port project in Sri Lanka. In a filing to the stock exchange on Tuesday, Adani Ports and SEZ Ltd revealed that it would utilize its own resources to fund the development of the Colombo West International Terminal (CWIT), a key infrastructure project in Sri Lanka’s largest transshipment port. According to the company, the project is on track for commissioning by early 2025 and will receive funding from internal accruals, in line with its ongoing capital management strategy.
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Adani Ports further clarified that it has withdrawn its request for financing from the US International Development Finance Corporation (DFC), which had initially agreed to provide a USD 553 million loan for the construction and operation of the terminal. Adani Ports, the Sri Lanka Ports Authority (SLPA), and the Sri Lankan conglomerate John Keells Holdings Plc are developing the CWIT as part of a joint venture to expand the Port of Colombo’s capacity, which has been operating at over 90% utilisation since 2021. Adani Ports, Sri Lanka Ports Authority (SLPA), and Sri Lankan conglomerate John Keells Holdings Plc expect the terminal to cater to growing economies in the Bay of Bengal and handle Ultra Large Container Vessels (ULCVs) with capacities of 24,000 TEUs. Once completed, it is projected to have an annual handling capacity of over 3.2 million TEUs.
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The decision to opt out of US funding marks a significant shift in the project’s financing strategy. In November 2023, the DFC had agreed to provide a loan as part of the US government’s broader efforts to counter China’s growing influence in the region. The financing was seen as a strategic move to bolster US ties with Sri Lanka and validate Adani’s ability to construct world-class infrastructure. However, the loan process encountered delays after the DFC requested amendments to the agreement between Adani and the SLPA to align with its conditions. This led to the review of the deal by Sri Lanka’s attorney general, further complicating the loan agreement.
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Sources close to the matter have indicated that as the project nears completion, Adani Ports, which holds a 51% stake in the venture, decided to proceed without external financing from the DFC. The US agency had also recently raised concerns about bribery allegations against Adani Group executives, which added another layer of complexity to the financing discussions. The DFC was reportedly actively assessing the ramifications of the allegations, despite not having disbursed any funds to Adani Ports at the time.
Last month, the US Department of Justice charged Adani and seven others over allegedly conspiring to pay USD 265 million in bribes to Indian officials for securing lucrative solar power contracts. Adani Group has denied all charges, calling them baseless and vowing to pursue legal recourse. Furthermore, the Colombo Port project is geopolitically sensitive, with Sri Lanka’s strategic location on key shipping routes making it a focal point in the broader competition for influence between the US and China in the Indian Ocean region. Initiated in September 2021, the CWIT project aims to significantly enhance Sri Lanka’s port infrastructure, thereby positioning the island as a key hub in the region’s expanding maritime trade.
Phase 1 of the CWIT is expected to become commercially operational by Q1 2025, with the terminal designed to be Sri Lanka’s largest and deepest container terminal. It will feature a quay length of 1,400 meters and an alongside depth of 20 meters, making it capable of handling some of the largest container vessels in the world. As of September 30, 2024, Adani Ports reported a robust financial position, with USD 1.1 billion in cash reserves and an operating profit of USD 2.3 billion over the past 12 months. The company’s decision to fund the project independently underscores its confidence in the successful completion and long-term viability of the CWIT.
