Adani Ports to self-finance Colombo Port Terminal Project after dropping US funding

Adani Ports opts out of US funding for Colombo project

Adani Ports and Special Economic Zone Ltd (APSEZ) announced it will self-finance the Colombo West International Terminal (CWIT) project in Sri Lanka using its internal resources, withdrawing its previous funding request from the US International Development Finance Corporation (DFC). The decision comes amid legal challenges Adani Group Chairman Gautam Adani faced in a separate US bribery case.

Project progress and funding shift

In a stock exchange filing on Tuesday, Adani Ports confirmed that the terminal project is progressing well and is on track for commissioning by early 2025. The company stated:

“The CWIT project in Sri Lanka is progressing well and is on track for commissioning by early next year. The project will be financed through the company’s internal accruals and capital management plan. We have withdrawn our request for financing from the DFC.”

Adani Ports had initially sought a USD 553 million loan from the DFC in November last year to fund the terminal’s development. The loan was seen as part of the US government’s broader strategy to counter China’s growing influence in the Indian Ocean region.

However, the financing process stalled after the DFC requested amendments to the partnership agreement between Adani Ports and the Sri Lanka Ports Authority (SLPA), which required legal review by Sri Lanka’s Attorney General. With the project nearing completion, Adani Ports, holding a 51% stake, chose to proceed without the DFC’s financial assistance.

Strategic importance of the Colombo Terminal

The CWIT project was launched in September 2021 through a partnership involving Adani Ports, Sri Lanka’s SLPA, and John Keells Holdings. The venture aims to transform Colombo Port into the largest and deepest container terminal in Sri Lanka, catering to major global shipping routes and emerging markets in the Bay of Bengal.

When fully operational, the terminal will feature:

• Quay Length: 1,400 meters
• Alongside Depth: 20 meters
• Annual Handling Capacity: Over 3.2 million TEUs
• Ultra Large Container Vessel (ULCV) Handling: Ships with capacities of up to 24,000 TEUs

Colombo Port, currently operating at over 90% capacity, is considered the busiest transshipment hub in the Indian Ocean, underscoring the need for additional infrastructure.

Legal troubles and project reassessment

The decision to withdraw from US funding follows bribery charges brought against Gautam Adani, his nephew, and six others by the US Department of Justice. They were accused of conspiring to pay USD 265 million in bribes to Indian officials to secure solar power contracts expected to generate USD 2 billion in profits over two decades.

The Adani Group has strongly denied the charges, calling them baseless, and pledged to pursue all available legal remedies. Meanwhile, the DFC indicated it was “actively assessing the ramifications” of the bribery allegations. No disbursement of funds had been made before Adani Ports’ withdrawal.

Financial resilience and future outlook

As of September 30, 2024, Adani Ports reported cash reserves of approximately USD 1.1 billion and an operating profit of USD 2.3 billion over the past 12 months.

Shares of Adani Ports and SEZ Ltd are expected to remain in focus as investors monitor the company’s progress on the Sri Lankan port project and the fallout from the US legal proceedings.

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