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The US Develop–ment Finance Corporation (DFC) on Wednesday announced it would provide $553 million for Colombo West International Terminal Pvt Ltd (CWIT), in which Adani Ports and Special Economic Zone (APSEZ) is a majority stakeholder with 51 per cent. It is part-owned by Sri Lanka’s John Keells Holdings and the Sri Lanka Ports Authority.
Adani Group, which has seen significant turbulence in the past months after short-seller Hindenburg Research made allegations of corporate governance lapses, sees the development as a positive.
“This is the first time the US government, through one of its agencies, is funding an Adani project, which is a ringing endorsement of the Group. It shows their confidence in the Group’s ability to invest and to create a world class container facility,” it said in a press release.
Karan Adani, whole time director and chief executive officer of the ports operator, said: “We welcome the association of the US Development Finance Corporation, the US government’s development finance institution, in funding the Adani project — and we see this as a reaffirmation by the international community of our vision, our capabilities and governance.”
The Port of Colombo is the largest and busiest trans-shipment port in the Indian Ocean. It has been operating at more than 90 per cent utilisation since 2021, signalling its need for additional capacity. The western terminal is being developed with an investment of close to $650 million.
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The construction of the terminal began in 2022 and it is expected to be completed by 2025, with the first phase seeing completion by 2024.
It 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.
The opportunity to capture trans-shipment cargo has prompted the Centre to expedite its own mega project -- the Great Nicobar Port.
According to Julie Chung, US ambassador to Sri Lanka, the development will facilitate private sector-led growth in Sri Lanka and attract foreign exchange during its economic recovery.
The island country had a major economic crisis in 2021, during which its currency depreciated by more than half and it had to halt essential imports, including food products and fertilisers.
India had extended close to $4 billion to Sri Lanka during this period.
Experts said it was a resistance move by the US to the growing Chinese influence in the region through heavy investment in infrastructure.
Colombo Port also has a terminal run by China Harbour Engineering Co.
“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,” said Scott Nathan, CEO.
According to Neelam Deo, a former diplomat, the investment needs to be seen in the context of China’s investment in Sri Lanka, where the country has been given Hambantota Port on a 99-year lease by the island nation, along with several other infrastructure projects.
“The message this sends to countries like Sri Lanka is that they have alternatives to the inflow of Chinese money. The investment will allow Sri Lanka to achieve a balance, at least partially,” Deo told Business Standard.
