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Adani Ports scraps $553 milion DFC loan for Colombo project
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Company to use internal funds, citing capital plans
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Colombo terminal on track to be operational from early 2025
If the recent indictment by the United States on bribery allegations against Gautam Adani, the promoter of Adani Group and other top executives, It will led to the pull out from the loan request ?
Adani Ports and Special Economic Zone Ltd (APSEZ), India’s biggest private port operator, said late on Tuesday night that it was no longer seeking a $553 million funding from the U.S. International Development Finance Corporation (DFC), the U.S. Government’s development finance institution, for constructing a deep-water container terminal at Colombo Port costing some $1 billion, according to Infra.
Withdrawn their request
“We have withdrawn our request for financing from the DFC. The project will be financed through the company’s internal accruals and capital management plan,” APSEZ said without indicating whether the recent indictment by the United States on bribery allegations against Gautam Adani, the promoter of Adani Group and other top executives, led to the pull out from the loan request.
Much fanfare in Colombo
The Colombo West International Terminal Pvt Ltd, 51 percent owned by APSEZ, is “progressing well and is on track for commissioning by early next year”, the port operator said. On 8 November 2023, the U.S. International Development Finance Corporation (DFC), agreed to lend $553 million (about Rs4,600 crore) to build the facility. But, more than a year after the DFC loan was announced with much fanfare in Colombo last year, the money has not been disbursed so far.
Requirements to change the B.O.T agreement
Admiral Sirimewan Ranasinghe (Retd), Chairman, Sri Lanka Ports Authority told ET Infra, a few days ago that the loan has not been disbursed “because there are certain requirements to change the B.O.T agreement for the terminal” “Whenever the U.S. State Department comes in with a loan facility, as per the specific requirement, they demand these things are required to change the BOT agreement that we have signed earlier”.
According to the rules and regulations
The loan disbursement, he said, is subject to some changes that the DFC has asked per the loan covenants and those changes in the BOT agreement are under discussion. “So, we have not consented (to the changes proposed by the DFC) because we are a partner in CWIT,” Ranasinghe stated. “We have to be very clear, once the BOT agreement has been signed, we do it as per the rules and regulations that we practice.
The changes sought by the DFC
The SLPA Chairman declined to divulge the changes sought by the DFC ahead of disbursing the loan to the under-construction terminal. “I cannot discuss that on a telephone conversation”, he maintained. “When you discuss anything with the U.S. government, they have a particular set of rules that demand certain requirements that binds with their system.
It is different to the system that we usually practice. And I don’t feel like going beyond to be very specific on that particular issue,” he stated.
John Keels Holding PLC
Local partners John Keels Holding PLC own 34 per cent while the state-owned Sri Lanka Ports Authority holds the balance 15 per cent equity in the 3.5 million twenty-foot equivalent units (TEUs) capacity a year terminal, the largest amongst the container terminals in Colombo port when fully operational. “CWIT is continuing with their work because they have come to an agreement with us on direct foreign investment. They are continuing with the project, and it is doing fine,” Ranasinghe pointed out.
The West Container Terminal
The West Container Terminal will have a berth length of 1,400 meters, water depth of 20 metres and terminal area of about 64 hectares, making it a prime transhipment destination to handle ultra large container ships.
The terminal costing $1 billion
The terminal costing $1 billion is being constructed in two phases with the first phase ($650 million) involving one berth of 800 metres quay length slated to be completed by the first quarter of next year.
The facility is expected to be fully completed by December 2025 by adding 600 metres of quay length. The terminal will be equipped with 14 quay cranes – 8 in Phase 1 and 6 in Phase 2 and 28 rail mounted gantry cranes – 18 in Phase 1 and 10 in Phase 2 – all supplied by China’s ZPMC. The 35-year contract is the largest foreign direct investment ever in Sri Lanka’s port sector.
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