No US help: Adani to use own funds for a Sri Lankan port in India-China faceoff

Gautam Adani, Asia’s second-richest man, has abruptly pulled out of a $553 million loan deal with the US International Development Finance Corporation (DFC) to fund a port terminal in Sri Lanka’s capital, Colombo.

The decision, announced in a company filing, ends a high-profile agreement celebrated just last year as a strategic push by India and the US to counter China’s influence in the Indo-Pacific.

Adani Ports and Special Economic Zone Ltd., majority-owned by the embattled billionaire, stated, “The project will be financed through the company’s internal accruals and capital management plan. We have withdrawn our request for financing from the DFC.” 

The filing did not address bribery allegations leveled against Adani and his executives in US courts last month. The indictment accuses them of paying over $250 million in bribes to secure solar energy contracts in India. Adani Group has denied the charges.

Construction on the deepwater West Container Terminal in Colombo, a critical node in the Indian Ocean’s trade network, has already begun. Initially slated for completion by December 2024, the project was positioned as one of the largest infrastructure investments in Asia for the US government-backed DFC. The agency had yet to disburse any funds, citing ongoing due diligence.

The conglomerate is also reeling from Kenya’s decision to cancel $2.6 billion in contracts linked to Adani after the indictment was made public.

At a November 2023 event in Colombo, Scott Nathan, DFC’s CEO, emphasized the project’s strategic significance. “It is a high priority for the US to be active in the Indo-Pacific region. It is obviously the engine of economic growth for the world,” Nathan said. 

At the time, Karan Adani, CEO of Adani Ports, framed the loan deal as a testament to the group’s governance and global vision, despite ongoing allegations by Hindenburg Research and other critics.