NEW DELHI: A United States government agency, the US International Development Finance Corporation (DFC), is funding USD 553 million to a consortium led by Adani Port & SEZ for the development of a port terminal in Sri Lanka's capital Colombo.
The funding is seen as India’s and the United State’s strategic move to curtail the growing influence of China in Sri Lanka. China, through its port entities, has a sizeable presence in Sri Lanka as the maritime nation in the Indian Ocean is expected to become a crucial part of its ambitious Belt and Road Initiative (BRI)
China Merchant Ports (CM Ports) has been operating the Colombo International Container Terminal (CICT) for over a decade and in 2017 it took over the Hambantota Port on the southern coast of the island under a 99-year lease. From the funding of Hambantota Port to getting its lease, the project has been so controversial that many term it a ‘debt-trap’ for Sri Lanka and a major reason for its recent economic and political downturn.
The investment by the Development Finance Corporation in Sri Lanka is itself significant as this institution was established just five years ago to counter China’s growing presence in underdeveloped and developed nations through the BRI. Experts believe that DFC’s funding and Adani’s commitment to Sri Lanka can give a big boost to India’s diplomatic power in the Southeast Asian region.
Development Finance Corporation Chief Executive Officer Scott Nathan said that the terminal project will add greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of their allies across the region. As for billionaire Gautam Adani, this is the first time that the US government, through one of its agencies, is funding an Adani project, which is a ringing endorsement of the Adani Group.
Karan Adani, whole-time director and CEO, of Adani Ports and Special Economic Zone, said “When completed, the 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.”
Karan also informed that the Adani group has proposed to the Sri Lankan government to set up the wind project in the northwestern region at an initial investment of $750 million. The Development Finance Corporation will be lending USD 553 million to the consortium developing the terminal. Adani Ports, with a 51% stake is the largest stakeholder in the consortium while Sri Lanka’s John Keells Holdings has a 34% share and the Sri Lanka Ports Authority has the remaining 15%.