The U.S. International Development Finance Corporation (DFC) recently said it will be providing $553 million financing to support the expansion of Colombo Port in Sri Lanka.
According to the company's statement, The funding will go to Colombo West International Terminal Pvt. Ltd., a joint venture that includes Adani Ports and SEZ Ltd., John Keells Holdings, and the Sri Lanka Ports Authority.
I extend my heartfelt congratulations to @DFCgov, the Sri Lankan government, @slpauthority, and @JohnKeellsGroup for the joint efforts in supporting the transformative West Container Terminal project in Colombo. This initiative is set to generate significant employment… pic.twitter.com/V29NYnD6GW— Gautam Adani (@gautam_adani) November 8, 2023
What is DFC?
DFC, the U.S. government’s development finance institution, partners with the private sector to finance solutions to the most critical challenges facing the developing world. It invests across sectors, including energy, healthcare, infrastructure, agriculture and small business and financial services.
Notably, This is the first time that the U.S. government, through one of its agencies, is funding an Adani project.
Creating employment opportunities
“We welcome the association of the U.S. International Development Finance Corporation (DFC), the U.S. government’s development finance institution, in funding the Adani project – and we see this as a reaffirmation by the international community of our vision, our capabilities and our governance,” said Karan Adani, Whole Time Director and CEO, Adani Ports and Special Economic Zone. “
Karan Adani stated that once the Colombo West International Terminal project is finished, it will change the economic and social conditions in Colombo and throughout Sri Lanka. Notably, It will also create jobs opportunities directly and indirectly and will improve the country's trade and business activities.
The need of the development
According to Adani, The Port of Colombo is the largest and busiest transshipment port in the Indian Ocean. It has been operating at more than 90% utilization since 2021, signalling its need for additional capacity.
The company expects that new terminal will support the growth of nearby economies in the Bay of Bengal by using Sri Lanka's strategic location along important shipping lanes.
“Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters. DFC’s commitment of $553 million in private-sector loans for the West Container Terminal will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of our allies across the region,” said DFC CEO Scott Nathan
Facilitating private-sector led growth
U.S. Ambassador to Sri Lanka Ms Julie Chung said the $553 million investment by DFC will facilitate private sector-led growth in Sri Lanka and attract crucial foreign exchange inflows during its economic recovery.
The consortium will develop the terminal under a 35-year build, operate, and transfer agreement. The terminal, upon completion, will be the largest and deepest in Sri Lanka, with the capacity to handle ultra-large container vessels and an expected annual handling capacity of over 3.2 million TEUs, the company said in a statement.