US to invest $553 million in Adani-owned deepwater terminal in Lanka
The investment is being seen as part of the US foreign policy goals of containing the growing Chinese influence in the Indo-Pacific region
The United States is all set to invest US $553 million in a port terminal the Adani Group is building in Sri Lankan capital Colombo.
The Colombo port is close to the international shipping routes and is considered one of the busiest ports in the Indian Ocean as about half of all sea-borne container traffic passes through Lankan waters.
Biggest investment by US agency in Asia
The funding will be provided by the US International Development Finance Corp. (DFC), set up during the Trump regime to finance development projects in developing nations, to advance US foreign policy goals, according to media reports. The proposed $553 million investment is being billed as the US agency’s largest investment in infrastructure development in Asia and the biggest worldwide.
The objective, according to the US agency, apart from adding new capacity to the port, is “strengthening the position of our allies across the region”, even as it promises the island nation that the loan will help in “creating greater prosperity for Sri Lanka – without adding to sovereign debt”. “DFC’s commitment of $553 million in private sector loans for the West Container Terminal (WCT) will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same strengthening the position of our allies across the region,” Reuters quoted DFC CEO Scott Nathan as saying.
According to a Bloomberg report, DFC would be working with John Keells Holdings Plc, a Sri Lankan conglomerate, and Adani Ports & Special Economic Zone Ltd. for their “local experience and high-quality standards”.
The Adani Group is developing the West Container Terminal (WTC) in which it holds a 51-per cent stake, whereas John Keells Holdings owns 34 per cent stake. The Sri Lanka Ports Authority holds the rest of the stake in the WTC.
Last year, Sri Lanka saw its economy contract by around 8 per cent as the country faced the worst financial crisis ever in its history. India provided the country with about $4 billion in swaps and credit lines to save its economy from collapsing.
Interestingly, the Colombo port also has a terminal which is owned by China Merchants Port Holdings Co Ltd. With an investment of about $2.2 billion, China has in recent years emerged as the largest foreign investor of the island nation. The US has been critical of China’s investment in the Hambantota port, which is little used, and calls it “debt-trap diplomacy”.
Initiative to contain China's influence in Lanka?
A report by the AidData Institute, a think-tank, at the Virginia-based William & Mary, a public research university, said that DFC has increased its funding in recent years, helping the US close the gap in development financing with China’s Belt and Road Initiative.
The latest US foray into the Indo-Pacific region is being seen as part of its foreign policy goals to contain the growing Chinese influence in the region, which is compatible with India’s national interests. However, the investment is also being seen as an endorsement of the Adani Group, which is facing the worst financial crisis in the wake of the expose by Hindenburg Research.
