The Adani Group, led by billionaire Gautam Adani, announced on Tuesday that it will self-finance its Colombo Port project in Sri Lanka, opting out of previously sought US funding.
Adani Ports and SEZ Ltd, in an official filing, confirmed that the project remains on track for commissioning by early 2025. The company emphasized that it would utilize “internal accruals” for funding, consistent with its financial management strategy.
Adani has withdrawn its 2023 request for financing from the US International Development Finance Corporation (DFC), which had agreed to a $553 million loan in November 2022. The loan was intended to support the development of the Colombo West International Terminal (CWIT), a deep-water container terminal.
The CWIT is a collaborative effort involving Adani Ports, Sri Lanka’s John Keells Holdings Plc, and the Sri Lanka Ports Authority (SLPA).
Decision to Proceed Without DFC Financing
The US DFC loan was initially viewed as part of broader efforts to counter China’s growing influence in the region. However, the process stalled when the DFC requested amendments to the agreement between Adani and SLPA, requiring approval from Sri Lanka’s Attorney General. With the project nearing completion, Adani Ports, which holds a 51% stake, decided to proceed independently.
This decision also comes amid recent scrutiny by the DFC over bribery allegations against Adani Group executives. While the group has strongly denied these allegations, no funds had been disbursed by the DFC.
Strategic Importance of the Colombo Port
The Port of Colombo, a key transshipment hub in the Indian Ocean, has been operating at over 90% capacity since 2021, underlining the need for expansion. The CWIT, when operational, will be Sri Lanka’s largest and deepest container terminal. It features a quay length of 1,400 meters and a depth of 20 meters, designed to handle Ultra Large Container Vessels (ULCVs) with capacities of 24,000 TEUs. The terminal will have an annual handling capacity exceeding 3.2 million TEUs.
Regional Geopolitical Significance
The CWIT project, launched in September 2021, is seen as a strategic move to enhance Sri Lanka’s role in global shipping routes while supporting the economic growth of the Bay of Bengal region. It also reflects broader geopolitical dynamics, as the US sought to counter China’s influence through the DFC’s involvement.
Despite the withdrawal of US funding, Adani Ports’ financial strength ensures the project remains on schedule. As of September 30, 2024, the company held cash reserves of $1.1 billion and generated an operating profit of $2.3 billion in the previous year.
Phase 1 of the CWIT is expected to begin commercial operations by Q1 2025, solidifying the Port of Colombo’s position as a critical node in the Indian Ocean’s maritime trade network.