Adani pulls out of $553 million US loan deal for Colombo port

Adani Group has again made the headlines by announcing withdrawal of its loan deal of $553 million from the US International Development Finance Corporation (DFC) for financing. The loan pact was for a port terminal in Sri Lanka’s capital Colombo. The decision was announced amid the controversies related to allegations of bribery and corruption linked to US authorities. The announcement was made by Adani Ports and Special Economic Zone Ltd (APSEZ), through the company’s filing, which stated, “The project will be financed through the company’s internal accruals and capital management plan. We have withdrawn our request for financing from the DFC”. They had indicated that they would no longer go after the US government sponsored financing aimed at the Colombo West International Terminal (CWIT) project. They had cited many reasons for the withdrawal, however mention of indictment of Adani and his aides couldn’t be seen anywhere. Professor of geopolitics, Dr. Rajiv Mohan, talking to True to Life News, remarked on the pull out, ” The decision of withdrawal is going to affect the relationship between local political realities and international investment dynamics. The strategic location of Sri Lanka, makes it a focal point for major powers, but the ongoing economic stability and allegations of corruption is acting as a hindrance in this process. The exit of the Adani group could signal a retreat from a critical geopolitical landscape that might allow China to further establish its strong influence in the region. In this situation, securing a robust partnership without compromising authority will be essential for Sri Lanka”In November, 2024, billionaire Adani and his several other officials were indicted for the allegation to bribe more than $250 millions to Indian government officials to win solar energy contracts, and concealing the plan as they sought to raise money from American investors. But the Adani group has rejected all the bribery charges. The charges had harmed the reputation and gave rise to serious questions about the business operations, both domestically and internationally. The project of Colombo West International Terminal, was a crucial envision of Sri Lanka’s effort to upgrade its maritime potentiality and to position itself as one of the key players in the region’s shipping industry. Sri Lanka’s geographical location in the Indian Ocean makes it a focal point for international maritime trade, thus the plan involved construction of a terminal that could effectively handle cargo volumes and accommodate larger vessels. Adani group had 51% stakes in this project, local conglomerate John keels Holding Plc holds 34% and the Sri Lanka Ports Authority holds the rest 15% of the stakes. The port was a vision to counterbalance the Chinese influence in Sri Lanka’s critical infrastructure development; it was a response to regional competition. A mortgage was signed between DFC and Adani group last year for the terminal project in Sri Lanka, when the US was keen to offer an alternative to China for infrastructure investment in the developing world. But several underlying factors converged to Adani’s rethink on the strategic choices. The most affecting factor is the recently surfaced bribery allegations, which has not only shaken the investor’s confidence but also have brought the group under scrutiny from financial regulators and governance watchdogs. In the response of the withdrawal, a mixed reaction of disappointment and understanding has been seen among various stakeholders. Asad Alam, spokesperson of Adani Group, has stated, “We remain committed to advancing the CWIT project and believe utilizing our internal funding will enable us to move forward without the added scrutiny and complications of external financing avenues”. On the other hand, representatives of Sri Lanka have emphasized their true commitment to ensure the enhancement of the nation’s maritime infrastructure by continuing the CWIT as a flagship project. Also, they have expressed hope for Adani’s internal financing decision. The Adani group is standing strong despite the indictment, or it is showing the conduct business as usual. Also, there was no immediate response from the side of the Development Finance Corp and White House on the request for a withdrawal statement. On 9th of December billionaire founder Gautam Adani was found sat close to Indian Prime Minister at a public conference, where Adani group pledged to invest tens of billions of dollars.