File Photo of Colombo Port.
Credit: Wikipedia Image
New Delhi/Colombo: The US will provide USD 553 million financing to Colombo West International Terminal (CWIT) Pvt Ltd -- a consortium that includes India's largest port operator Adani Ports and SEZ Ltd, as it tries to blunt China's aggressive infrastructure investment in the island nation.
Adani Ports and Special Economic Zone Limited (APSEZ) in a statement said that the US fund will support the development of a new deepwater shipping container terminal in the Port of Colombo.
'(It) will facilitate private sector-led growth and attract crucial foreign exchange to Sri Lanka to aid in its economic recovery,' it added.
According to the statement, the US, Sri Lanka and India will foster an enduring legacy of cooperation in the development of sustainable infrastructure, like smart and green ports.
Over the years, China made inroads into Sri Lanka by offering loans and other forms of financial aid for infrastructure projects.
The Hambantota port, with its strategic location near busy Indian Ocean shipping routes, was touted as good for Sri Lanka.
But it soon turned out to be a loss-making investment, and the Sri Lankan government defaulted on the Chinese loans of more than USD 1 billion. China foreclosed the loan in 2017, taking over the key port's operations on a 99-year lease, much to the concern of India.
DFC is the US government's development finance institution. CWIT is a consortium of India's largest port operator Adani Ports and SEZ Ltd, Sri Lanka's leading enterprise John Keells Holdings (JKH) and the Sri Lanka Ports Authority.
DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world. It invests across sectors, including energy, healthcare, infrastructure, agriculture and small business and financial services.
As per the statement, this is the first time that the US government, through one of its agencies, is funding an Adani project.
APSEZ whole-time director and CEO Karan Adani said, 'we welcome the association of the US International Development Finance Corporation (DFC), the US government's development finance institution, in funding the Adani project.' 'When completed, 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,' he added.
The Port of Colombo is the largest and busiest transshipment port in the Indian Ocean. It has been operating at more than 90 per cent utilization since 2021, signalling its need for additional capacity.
According to the statement, 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 these expanding markets.
DFC CEO Scott Nathan said, 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 USD 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.' The US Ambassador to Sri Lanka Julie Chung said, the USD 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.
'Sri Lanka regaining its economic footing will further our shared vision for a free and prosperous Indo-Pacific,' she added.
John Keells Holdings chairperson Krishan Balendra said, DFC's investment is an endorsement of the potential of the West Terminal project and a boost for investor confidence as Sri Lanka's economy recovers.
Colombo West International Terminal is a consortium comprising Adani Ports and SEZ Ltd, Sri Lanka's John Keells Holdings and the Sri Lanka Ports Authority. The consortium will develop Colombo West International Terminal (CWIT) on a build, operate and transfer (BOT) basis for a period of 35 years.
The development of this terminal will reinforce Colombo Port's position as the primary hub in the region and is expected to elevate its ranking to 20th among the world's top container terminals, it added.
It will also transform the port's position in terms of global shipping connectivity, which is currently 12th globally.
According to the statement, when commissioned, CWIT will be the largest and deepest container terminal in Sri Lanka.
'With a quay length of 1,400 m and an alongside depth of 20 m, CWIT will be equipped to handle ultra large container vessels with capacities of 24,000 TEUs, 'the statement said, adding that the new terminal's annual cargo handling capacity is likely to exceed 3.2 million TEUs.