Desk : Sri Lanka has shown no intention to cancel a key port development deal with an Adani-led consortium to build a deepwater container terminal at Colombo port. The project, a billion-dollar investment, is poised to become the largest foreign direct investment (FDI) in Sri Lanka’s port sector.
In a recent interview, Sri Lanka Ports Authority (SLPA) Chairman Admiral Sirimewan Ranasinghe (retd.) reiterated that there has been no discussion on canceling the agreement. Managed by Colombo West International Terminal Private Limited (CWIT), the project is majority owned by Adani Ports and Special Economic Zone Limited (APSEZ), which holds a 51% stake. The terminal, which will be the largest in Colombo, is expected to significantly increase Sri Lanka’s transshipment capacity.
Responding to concerns raised over bribery allegations, Ranasinghe said: “There has been no discussion about it (cancelling the deal).” He noted that the United States International Development Finance Corporation (DFC) had provided a $553 million loan to finance the terminal, further strengthening the legitimacy of the project. The US government’s support, through a loan managed by the State Department, serves as a clear signal that the accusations against Adani have not affected international confidence in the project. Adani Group has strongly denied the bribery allegations and vowed to pursue all legal avenues to clear its name. The group’s reputation took a hit in early 2023 following allegations by US short-seller Hindenburg Research that raised questions about the group’s financial practices. However, the support from the US government development agency reflects continued confidence in the Group’s ability to deliver the project and deliver on its commitments.
The disbursement of the DFC loan, which was announced in November 2023, has not yet occurred, mainly due to pending changes to the Build-Operate-Transfer (BOT) agreement. These changes are a standard requirement of the US government before distributing such large loans. Ranasinghe confirmed that Sri Lankan authorities are still in talks with the DFC and the Attorney General’s Department to determine whether the proposed changes to the agreement can be made. “The loan has not yet been disbursed because there are some requirements to modify the BOT agreement for the terminal,” Ranasinghe said. Once the changes are approved and the necessary legal processes are completed, the loan will be disbursed.
The Colombo West International Terminal is a major project designed to increase Sri Lanka’s capacity to handle ultra-large container ships. Once completed, the terminal will have a berthing length of 1,400 meters, a water depth of 20 meters and a surface area of approximately 64 hectares. Phase 1 of the project, which includes the construction of an 800-meter pier, is scheduled for completion in early 2024, and the entire project is expected to be completed in December 2025. The terminal will be equipped with advanced port equipment, including quay cranes and rail-mounted gantry cranes, supplied by ZPMC of China. The strategic importance of this project is underlined by its potential to balance China’s growing influence in the region, especially in light of China’s investments in Sri Lanka’s Hambantota and Colombo ports.
The successful completion of the Colombo West International Terminal will not only boost Sri Lanka’s maritime potential but also strengthen Adani Group’s presence in the region. Despite the legal challenges, both the Sri Lankan authorities and the Adani Group are committed to completing the project. As discussions continue over the final stages of the DFC loan and the necessary legal adjustments, the terminal project is expected to be transformative for the region’s port infrastructure. As Ranasinghe summarized, “Adani has brought the team; So far they have made the promised investments and are moving forward as planned. The future of the terminal now depends on the completion of legal and financial processes, but indications suggest that the project is progressing as planned.