By Sulochana Ramiah Mohan
Adani Ports and Special Economic Zone Limited (APSEZ Ltd.), India’s largest private port operator, has withdrawn from the USD 553 million loan offered by the US International Development Finance Corporation (DFC) for the Colombo West International Terminal (CWIT). The funding had been part of the US Government’s broader strategy to counter China’s growing influence in the region, according to Adani’s headquarters in Ahmedabad.
The withdrawal came in the wake of delays seen in the DFC loan process after they were in consulting with the Sri Lanka Ports Authority requesting for few amendments to the agreement between Adani and the Sri Lanka Ports Authority (SLPA) to align with its conditions. These changes were subsequently reviewed by Sri Lanka’s Attorney General (AG). The AG reviewed twice the proposals for amendment by the DFC and finally Adani said it will withdraw from the partnership with the DFC.
As the Adani project nears completion, Adani Ports, which holds 51% of the venture, decided to proceed without DFC funding, according to officials.
The US Embassy also confirmed that the APSEZ withdrew its request for DFC financing for the Colombo West International Terminal (CWIT).
The Embassy said yet, the DFC remains committed to Sri Lanka, where it has invested over USD 400 million in agriculture, health, women-owned small and medium enterprises (SMEs), and financial services.
Further, the US Embassy said that the DFC will continue to seek opportunities to finance private sector-led projects in Sri Lanka to benefit its people and economy.
In a statement, Adani Ports and SEZ Ltd. confirmed it will self-finance the CWIT project, with commissioning set for early 2025. The project, which will be Sri Lanka’s largest container terminal, will be fully funded through internal accruals, requiring no external financing.
In an exchange filing on 10 December, APSEZ reiterated its decision to fund the deepwater terminal project—developed in partnership with the Sri Lanka Ports Authority (SLPA) and John Keells Holdings (JKH) in Colombo Port—using internal resources. The company emphasised that the project remains on track for completion. Additionally, APSEZ confirmed that it has withdrawn its 2023 request for financing from the US International Development Finance Corporation (DFC).
In November 2023, the DFC had pledged the USD 553 million loan to support the CWIT’s development, construction, and operation. The financing was part of the US Government’s efforts to counter China’s growing influence in the region and was seen as an endorsement of Adani’s ability to develop world-class infrastructure, according to Adani Ports.
Adani’s decision comes amid ongoing legal challenges faced by the Adani Group in the US. Analysts, however, are confident in Adani Ports’ ability to self-finance the project, citing the company’s strong cash flows and access to low-cost capital. A report published by US-based research firm JP Morgan last week reaffirmed a “Buy” rating on Adani bonds, highlighting the company’s growth potential supported by its strong cash flows. The report stated, “Adani Ports’ ability to scale and grow using internal cash flows gives us strong comfort.”
The CWIT project was initiated in September 2021, when Adani Ports signed an agreement with the Sri Lanka Ports Authority (SLPA) and Sri Lankan conglomerate John Keells Holdings, pledging over USD 700 million to expand the capabilities of Colombo Port. The CWIT will be Sri Lanka’s largest and deepest container terminal, featuring a quay length of 1,400 metres and an alongside depth of 20 metres. Once completed, the terminal will be capable of handling 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.
As of 30 September 2024, Adani Ports had approximately USD 1.1 billion (Rs 8,893 crore) in cash reserves and generated an operating profit of USD 2.3 billion (Rs 18,846 crore) in the past 12 months. An official query sent to Adani Ports & SEZ had not received a response at the time of going to print.
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