The United States has entered into a partnership with the Adani Group, providing a substantial loan of half a billion dollars for the construction of a new deep-water shipping container terminal at the strategically located Colombo Port. This move is seen as part of an effort to counter China's increasing presence in Sri Lanka, particularly its acquisition of stakes in ports in the capital, Colombo, and the southern town of Hambantota.
The U.S. International Development Finance Corporation (DFC) made the announcement of its $553 million financing for the Colombo West International Terminal Private Limited (CWITP), marking Sri Lanka's most significant foreign direct investment, totaling $750 million for the port's development.
This joint venture involves the United States, Sri Lanka, and India, with Adani Ports & Special Economic Zones Limited (APSEZ) holding a majority share of 51% in the project. The collaboration aims to bolster trade and maritime infrastructure in the region while ensuring a diverse range of international interests in these strategic ports.
"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," DFC CEO Scott Nathan said while announcing the partnership in Colombo.
"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 added.
In addition to Adani Ports & Special Economic Zones Limited (APSEZ), the Colombo West International Terminal Private Limited (CWITP) includes Sri Lanka's John Keells Holdings, which holds a 34% share in the project, operating on a build, operate, and transfer (BOT) basis for a period of 35 years.
Furthermore, the state-run Sri Lanka Ports Authority (SLPA) is also a participant in this venture, with a 15% share of the total project. This collaboration involves various stakeholders, ensuring a diverse ownership structure for the development and operation of the Colombo West International Terminal.
“We welcome the associate of the DFC in funding the Adani's project. We see this as reaffirmation by the international community of our vision of our capability and our governance. This is the largest single FDI into Sri Lanka through a single project," Karan Adani, APSEZ’s Whole Time Director and CEO, said at the event in Colombo.
“The relationship between Sri Lanka, the US and India is multifaceted and holds great promise. It symbolises the intersection of economic interests, regional stability and global security. Today is a historic day for all of us and today is a day that celebrates the deep historical and cultural and socio-economic bonds between two Asian neighbours Sri Lanka and India.
"Today is also a day we see the US- India relationship grow in strength and breath. I see this project as a first step through which three countries can foster cooperation and the development of sustainable infrastructure like smart and green ports which will improve the efficiency of port operation and also align with global efforts to combat climate change,” he added.
On her part, the US Ambassador to Sri Lanka Julie Chung said: "The $553 million 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 US' 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."
The Port of Colombo stands as the largest and most active transshipment port in the Indian Ocean. Operating at over 90% utilization since 2021, this indicates a pressing need for expanded capacity.
The new terminal, Colombo West International Terminal (CWIT), will play a vital role in serving the growing economies in the Bay of Bengal. Sri Lanka's strategic location along major shipping routes, coupled with its proximity to these expanding markets, positions it as a key player in the region's trade and maritime activities, as noted by the U.S. Embassy.
Upon completion, CWIT is poised to become Sri Lanka's largest and deepest container terminal, designed to accommodate ultra-large container vessels with capacities of up to 24,000 TEUs. The annual cargo handling capacity of this new terminal is anticipated to exceed 3.2 million, further bolstering the Port of Colombo's role as a vital hub for international trade and shipping.
(With Agency Inputs)