Adani’s Colombo Port project under scrutiny as US Agency conducts due diligence

United States international development finance corporation, which is partially funding the Colombo port terminal in Sri Lanka, is employing due diligence on the project after the allegations against the Adani Group chairman by the US Department of Justice came to light. The US agency mentioned that it hasn’t concluded a final agreement on the loan worth $500 million to the conglomerate yet, according to a Bloomberg report. The project is partly owned by the Adani Group. 

“We continue to conduct due diligence to ensure that all aspects of the project meet our rigorous standards before any loan disbursements are made,” the US agency official told Bloomberg in a statement. “The project has not reached financial close or signed a loan agreement,” the agency added. 

After the allegations made in an indictment order against Gautam Adani and his six associates, it is not just the chairman and the Group that is under the scanner but also its various multinational projects. Adani, who is charged with fraud in a $250 million bribery scheme, has felt the heat of the accusations as the Kenyan government has cancelled a deal worth $2.5 billion with the Group. The agreement was signed between the Kenyan government and Adani Energy Solutions to build, upgrade and expand electricity transmission lines and capital in Nairobi’s Jomo Kenyatta International Airport (JKIA) on a term that the Adani Group will manage it for 30 years.

Adani Group Projects in Sri Lanka 

The contract to develop Colombo Port was signed by the Adani Group in 2021. The project is a joint venture with Sri Lanka’s John Keells Holdings and the Sri Lanka Ports Authority (SLPA), where the Gautam Adani-led company holds a majority stake. Earlier it was estimated that the project would require an investment of nearly $700 million.

In November 2023, the US agency said it would loan nearly $553 million for building the Colombo Port. The joint venture was seen as a balancing act to counter China’s influence in Sri Lanka. China had built the nearby Colombo International Container Terminal (CICT) and the Hambantota Port. 

Apart from this, the newly elected Sri Lankan President Anura Kumara Dissanayake had promised during elections campaign that if he comes to power, he will reconsider approval given to the Adani Group’s wind power project by the previous government. Before the US allegations surfaced, the Adani Group has already been under scanner in Sri Lanka under the new government. Additionally, the matter was raised in the country’s Supreme Court. 

Source: Outlook Business
--Agencies