Eye on China, US agency commits funds to Adani’s Colombo project

The funding by DFC — a development finance institution and agency of the United States federal government that invests in development projects in lower- and middle-income countries — is being seen as a concerted push by Washington for the India-linked project at a time when New Delhi is competing with Beijing for influence in the island nation that is one of the world’s key transit hubs, given its location near trunk shipping routes, and is currently in the midst of a financial crisis.

“The new terminal reflects DFC’s commitment to financing high-quality infrastructure that supports its partner’s development needs, invests in local communities, and is respectful of local financial conditions,” the DFC said in a statement. The investment further demonstrates the enduring commitment of the US to Sri Lanka’s economic growth and its regional economic integration, including with India, it said.

China Merchants Holdings Co Ltd and Sri Lanka Ports Authority are jointly developing Colombo’s South Container Terminal, the first terminal under expansion in the Colombo port.

Chinese research ship Shi Yan 6 berthed at Colombo harbour on October 26. (AP)

“DFC Chief Executive Officer (CEO) Scott Nathan travelled to Sri Lanka to launch $553 million in financing to Colombo West International Terminal to support the development of the deepwater West Container Terminal located within the Port of Colombo,” the American lender said in its statement.

Sri Lanka Foreign Minister Ali Sabry and US Ambassador to Sri Lanka Julie Chung joined CEO Nathan for the ceremonial launch of the new terminal.

The Port of Colombo is the largest and busiest transshipment port in the Indian Ocean and has been operating at over 90 per cent utilisation since 2021, signalling its need for capacity expansion. 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 key developing markets.

While Adani Ports and SEZ holds majority equity in the West Container Terminal project, John Keells Holdings owns 34 per cent and the rest is held by the state-run Sri Lanka Ports Authority. Dredging for the terminal commenced in November 2022 and the entire project is slated to be ready by the end of 2025.

“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 in the statement.

“Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters. DFC’s commitment of $553 million in private-sector loans for the West Container Terminal will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of our allies across the region,” Nathan said.

US Ambassador Julie Chung said, “The investment by DFC for the long-term development of the Port of Colombo’s West Container Terminal will facilitate private- sector-led growth in Sri Lanka and attract crucial foreign exchange inflows during its economic recovery. This financing is symbolic of the United States’ long-standing commitment to the development and well-being of the people of Sri Lanka. Sri Lanka regaining its economic footing will further our shared vision for a free and prosperous Indo-Pacific.”