The US International Development Finance Corporation (DFC) has pledged $553 million in financing for a port terminal project in Colombo, Sri Lanka. This project is significant because it marks the first venture by an Indian company, the Adani Group, into the Sri Lankan port sector. The Adani Group, led by Indian billionaire Gautam Adani, holds a 51% stake in the west container terminal of the port. Notably, the port also has a terminal operated by China Merchants Port Holdings Co Ltd.
Sri Lanka, situated off the southern coast of India, has been grappling with its most severe financial crisis in more than seven decades. The crisis was triggered by dwindling foreign exchange reserves, resulting in a sharp economic contraction of 7.8% in 2022.
The DFC's commitment to providing private sector loans for the West Container Terminal (WCT) is expected to expand the port's shipping capacity. This move aims to foster economic prosperity in Sri Lanka without adding to the country's sovereign debt. Simultaneously, it strengthens the positions of allies in the region, as stated by DFC CEO Scott Nathan.
India and China have been competing for influence in Sri Lanka, which is strategically positioned near busy shipping routes. The West Container Terminal is co-owned by the Adani Group, John Keells Holdings (a Sri Lankan conglomerate), and the state-run Sri Lanka Ports Authority (SLPA).
ALSO READ: Russian hockey star threatens to blow up plane over denied vodka
The project, which includes dredging operations, began in November, with the first phase slated for completion in the third quarter of 2024. The entire project is expected to be finished by the end of 2025. India, recognizing Sri Lanka's economic challenges, extended approximately $4 billion in swaps and credit lines to the country last year to support critical imports of fuel, medicine, and fertilizers during the height of the crisis.
Copyright © © 2022 Copyright. All Rights Reserved with Arth Parkash