Adani Ports and SEZ Ltd has said it will not seek US funding for the Colombo West International Terminal project in Sri Lanka and will use its own resources to fund the project. This comes against the backdrop of US prosecutors indicting Adani Group Chairman Gautam Adani in an alleged bribery case.
In an exchange filing late on Tuesday, the Adani-led conglomerate said the Colombo project was on track for commissioning by early next year and said the company will fund the same through “internal accruals”, aligning with its capital management strategy. Adani Ports also said it withdrew its 2023 request for financing from the US International Development Finance Corporation (DFC).
In November last year, the DFC agreed to provide a USD 553 million loan to support the development, construction and operation of the Colombo West International Terminal, a deep-water container terminal, at the Port of Colombo.
The terminal is being developed by a consortium of Adani Ports, Sri Lankan conglomerate John Keells Holdings Plc and the Sri Lanka Ports Authority (SLPA).
The DFC financing was part of the US government’s move to counter China’s growing influence in the Indian Ocean region and was seen as an endorsement by Adani Ports to develop world-class infrastructure.
However, the loan process stalled after the DFC asked that the agreement between Adani and the SLPA be amended to align with their conditions, which then went under review by Sri Lanka’s Attorney General. As the project is nearing completion, Adani Ports, which holds 51 per cent of the venture, chose to proceed with the project without funding from the DFC, officials privy to the process said.
In September 2021, the Colombo West International Terminal project was initiated when Adani Ports signed a deal with the Sri Lanka Ports Authority and Sri Lankan conglomerate John Keells Holdings, pledging over USD 700 million to expand the capabilities of Colombo Port.
The new terminal is expected to cater to the 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. Phase 1 of the project is scheduled to become commercially operational by Q1 2025.
The terminal will be Sri Lanka’s largest and deepest container terminal, with a quay length of 1,400 metres and an alongside depth of 20 metres. When complete, the terminal will be able to handle Ultra Large Container Vessels (ULCVs) with capacities of 24,000 TEUs and is expected to have an annual handling capacity of over 3.2 million TEUs.
The Port of Colombo is the largest and busiest transhipment port in the Indian Ocean. It has been operating at more than 90 per cent utilisation since 2021, signalling its need for additional capacity.
Last month, the US Department of Justice charged Adani, his nephew and six others for allegedly conspiring to pay USD 265 million in bribes to Indian officials to secure lucrative solar power supply contracts that were expected to yield USD 2 billion in profits over 20 years.
Adani Group has denied all charges as baseless and vowed to pursue all possible legal recourse.
Recently, the DFC had said it was “actively assessing the ramifications” of the bribery allegations against Adani and his group’s executives. It had so far not disbursed any money to Adani Ports.
As of September 30, Adani Ports had approximately USD 1.1 billion in cash reserves and generated an operating profit of USD 2.3 billion in the past 12 months.
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