In a surprising turn of events, Adani Ports, part of the Adani Group conglomerate, has decided to walk away from a $553 million loan offered by the United States Development Finance Corporation (DFC) for its Colombo Port project in Sri Lanka. This decision, disclosed by the company on Tuesday, raises questions about what might have pushed the Indian giant to reject such a large financial backing.
Why Adani Walked Away
The project, called the West Container Terminal (WCT) at Colombo Port, is already nearing 85% completion, with its first phase expected to be operational by early 2025. Adani Ports initially agreed to the loan in November 2023, but sources revealed that delays and changing conditions made the deal impractical.
According to insiders, the DFC had requested changes to the loan terms, which were still under review by Sri Lanka’s Attorney General. While these changes primarily concerned Sri Lankan authorities, Adani Ports decided it no longer made “business sense” to involve the US agency in the project.
Some experts see this as more than just a business decision. They claim it’s a calculated response to recent events involving the Adani Group and US law enforcement.
A Subtle Message to the US?
Last month, the US Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) named Adani Group Chairman Gautam Adani in an indictment related to financial misconduct. Although no legal summons has been issued against Adani yet, media reports speculated on potential warrants.
Insiders suggest that the decision to abandon the DFC loan was a way for Adani Ports to signal dissatisfaction with US actions. “This is a preemptive strike from Adani against the US,” a source said, hinting that the indictment may have been aimed at tarnishing the group’s reputation.
The Indian government, meanwhile, has distanced itself from the controversy, calling it a private matter. Sri Lanka, however, has taken the US indictment seriously, assigning its foreign and finance ministries to study its potential impact on the Colombo Port project.
Impact on Adani’s Global Deals
The fallout from the US indictment hasn’t been limited to Sri Lanka. Other countries and companies are reevaluating their ties with Adani:
- Kenya: President William Ruto announced that Kenya was scrapping a power transmission deal with Adani Energy Solutions and suspending a major airport expansion contract.
- France: TotalEnergies, a French oil and gas giant, said it would pause new investments in Adani Green Energy, although it remains a 50% stakeholder in ongoing projects.
- Bangladesh: A government committee has recommended auditing a power agreement signed between the former Sheikh Hasina administration and Adani Power Jharkhand Limited.
These moves have created ripples in Adani’s market value and triggered stock market volatility in recent weeks.
What’s Next for the Colombo Port Project?
Despite the controversy, Adani Ports remains committed to the Colombo Port project. Under a 35-year agreement signed in 2021, Adani Ports owns a majority 51% stake in the WCT project, while Sri Lanka Ports Authority (SLPA) and its local partner, John Keells Holdings (JKH), hold 15% and 34%, respectively.
The $650 million project follows a Build-Operate-Transfer (BOT) model, where Adani Ports will manage the terminal before eventually handing it back to Sri Lanka. JKH has assured stakeholders that the project remains financially viable, with a solid mix of debt and equity funding.
A Bigger Picture
Adani’s withdrawal from the DFC loan underscores a larger story of rising geopolitical tensions and the challenges Indian companies face on the global stage. For now, Adani’s bold decision to sever ties with US financing has sent a clear message: it’s willing to go its own way, even if that means navigating rough waters.
