The contours of Adani Ports & SEZ’s record investment in a Colombo port broadened Wednesday with the US International Development Finance Corporation (DFC) announcing its funding into the project.
DFC will lend $553 million to the 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. Adani owns 51% of the consortium. It’s a project backed loan with a tenure of 20 years.
The project cost for the first phase is $650 million. It will be completed by December 2024. The total project cost-including another phase–is $1 billion.
The investment into this port is the largest chunk of foreign direct investment that has ever come into Sri Lanka.
“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,” said a statement.
“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,” it added.
The investment assumes significance especially after allegations of irregular practices by an American short seller Hindenburg wiped out large swathes of Adani’s market value earlier this year. It also underlines America’s efforts to counter China’s growing investment and expansion in Sri Lanka.
“We welcome the association of the U.S. International Development Finance Corporation (DFC), the U.S. 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 our governance,” said Karan Adani, Whole Time Director and CEO, Adani Ports and Special Economic Zone.
“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,” he added.
The Port of Colombo is the largest and busiest transshipment port in the Indian Ocean. It has been operating at more than 90% utilization since 2021, signalling its need for additional capacity.
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.
“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.
The consortium will develop Colombo West International Terminal (CWIT) on a build, operate and transfer (BOT) basis for a period of 35 years. When commissioned, CWIT will be the largest and deepest container terminal in Sri Lanka. With a quay length of 1,400 m and an alongside depth of 20 m, CWIT will be equipped to handle ultra large container vessels with capacities of 24,000 TEUs. The new terminal’s annual cargo handling capacity is likely to exceed 3.2 million TEUs.
In a previous interview Karan Adani had said international operations will account for 10%-12% of Adani Ports’ business in the next few years.
The Adani Group also plans to set up a renewable project in northern Sri Lanka, said Adani.
“We have put in our proposal for setting up phase 1 of the planned 500 megawatt of wind farm. Then, there are larger plans to export renewable energy from Sri Lanka into India. That entails putting up a cross country transmission line and connecting it to the Indian grid. The first phase will cost us $750 million,” said Adani.
The project will be completed by December next year, Sri Lanka’s Energy Minister Kanchana Wijesekara said recently.
