No US help: Adani uses his own money to set up Sri Lankan port in India-China standoff

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

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

“The project will be financed through the company’s internal accruals and capital management plan. We have withdrawn our application for funding from the FFC coalition,” Adani Ports and Special Economic Zone Ltd, majority owned by the embattled billionaire, said.

The request did not address the bribery allegations brought against Adani and his executives in US courts last month. The indictment accuses them of paying more than $250 million in bribes to secure solar contracts in India. Adani Group denied the accusations.

Construction of the Colombo Western Deepwater Container Terminal, which constitutes a critical node in the Indian Ocean trade network, has already begun. Initially scheduled to be completed by December 2024, the project has been named one of the largest infrastructure investments in Asia by the US government-backed Development Finance Corporation. The agency has not yet disbursed any funds, indicating ongoing due diligence.

The group is also reeling from Kenya’s decision to cancel $2.6 billion worth of contracts linked to Adani after the indictment was published.

At a November 2023 event in Colombo, Scott Nathan, CEO of the Development Finance Corporation, emphasized the strategic importance of the project. “It is a top priority for the United States to be active in the Indo-Pacific region. It is clearly the engine of economic growth for the world,” Nathan said.

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