https://sputniknews.in/20241211/why-did-adani-shut-out-us-from-colombo-port-project-8535549.html
Why Did Adani Shut Out US from Colombo Port Project?
Why Did Adani Shut Out US from Colombo Port Project?
Sputnik India
In a stock exchange disclosure on Tuesday, India's Adani Ports said that it had withdrawn its request for financing Sri Lanka's Colombo West International Project (WCIT) from US government agency DFC.
2024-12-11T15:48+0530
2024-12-11T15:48+0530
2024-12-11T15:48+0530
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Involving the United States government agency DFC in the Colombo Port's West International Project (WCIT) no longer made any "business sense" for Adani Ports and Special Economic Zone (APSEZ), industry sources have told Sputnik India.They said the DFC had sought certain changes to the terms and conditions of the loan agreement, which are still pending before Sri Lanka’s Attorney-General."The changes to the terms concern the Sri Lankan authorities more than the Adani Ports," industry sources stated.They added that it has almost been a month since the US indictment, but the Adani Group has not received any summons from the US law-enforcement, despite reports media reports about warrants having been issued against the Indian billionaire.The Ministry of External Affairs (MEA) said last month that it was yet to receive any request for legal assistance from the US on the Adani matter, which it emphasised was an issue involving a private Indian entity and not the Indian government.In the wake of the US indictment, Sri Lanka said that it was taking the charges very seriously, with the official spokesperson Nalinda Jayatissa stating at the time that foreign and finance ministries had been tasked to prepare a report on the matter. On the other hand, the USDFC said in a statement that it was "actively assessing the ramifications in light of the recent DOJ announcement".Adani Ports signed a 35-year lease agreement with state-backed Sri Lanka Ports Authority to develop and run WCIT under a Build, Operate and Transfer (BOT) model in 2021. Under the terms of the pact, Adani Ports would manage the port with its local partner John Keells Holdings (JKH) PLC. APSEZ owns a majority 51% stake in the project, while JKC and SLPA own 34% and 15% stakes respectively. A statement from JKH pegged the project value at $650 million, with a 70:30 debt to equity mix.Meanwhile, Kenyan President William Ruto announced in the country's parliament that his government had scrapped a power transmission contract between Adani Energy Solutions and Kenya Electrical Transmission Company (KETRACO) as well as suspended the procurement process for the expansion of Jomo Kenyatta International Airport (JKIA) "based on the information provided to us by our partner nations".Similarly, French oil and gas company TotalEnergies also announced that it was putting on hold any further investments in Adani Green Energy due to the US indictment. In a stock market filing, Adani Green said that the French firm's statement won't have any "material impact" on its operations or its growth plan.Meanwhile, in Bangladesh, a committee constituted by the interim government headed by Muhammad Yunus has recommended an audit of the power agreement signed between the former Sheikh Hasina government and Adani Power Jharkhand Limited (APJL).
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Why Did Adani Shut Out US from Colombo Port Project?
In a stock exchange disclosure on Tuesday, India's Adani Ports said it had withdrawn its request for financing Sri Lanka's Colombo Port from the US Development Finance Corporation (DFC), which had pledged $553 million last November.
Involving the United States government agency DFC in the Colombo Port's West International Project (WCIT) no longer made any "business sense" for Adani Ports and Special Economic Zone (APSEZ), industry sources have told Sputnik India.
"The loan deal with the USDFC had been announced last November. However, not a single penny has been disbursed till now, with the WCIT project nearing 80-85 percent completion. The first phase is expected to inaugurate in the first quarter of 2025," the sources explained.
They said the DFC had sought certain changes to the terms and conditions of the loan agreement, which are still pending before Sri Lanka’s Attorney-General.
"The changes to the terms concern the Sri Lankan authorities more than the Adani Ports," industry sources stated.
The ports-to-mining conglomerate had sent a "subtle message" to the US that they can't play both ways, in the wake of the Department of Justice (DoJ) and Securities and Exchange Commission (SEC) naming Gautam Adani in an indictment made public last month, the sources stressed.
"It is a preemptive strike from Adani against the US," they emphasised.
They added that it has almost been a month since the US indictment, but the Adani Group has not received any summons from the US law-enforcement, despite reports media reports about warrants having been issued against the Indian billionaire.
The Ministry of External Affairs (MEA) said last month that it was yet to receive any request for legal assistance from the US on the Adani matter, which it emphasised was an issue involving a private Indian entity and not the Indian government.
"The intent of the US indictment was to cause reputational damage to the Adani Group is becoming clear now," industry sources stated.
In the wake of the US indictment, Sri Lanka said that it was taking the charges very seriously, with the official spokesperson Nalinda Jayatissa stating at the time that foreign and finance ministries had been tasked to prepare a report on the matter. On the other hand, the USDFC said in a statement that it was "actively assessing the ramifications in light of the recent DOJ announcement".
Adani Ports signed a
35-year lease agreement with state-backed Sri Lanka Ports Authority to develop and run WCIT under a Build, Operate and Transfer (BOT) model in 2021. Under the terms of the pact, Adani Ports would manage the port with its local partner John Keells Holdings (JKH) PLC. APSEZ owns a majority 51% stake in the project, while JKC and SLPA own 34% and 15% stakes respectively. A statement from JKH pegged the project value at $650 million, with a 70:30 debt to equity mix.
Meanwhile, Kenyan President William Ruto
announced in the country's parliament that his government had scrapped a power transmission contract between Adani Energy Solutions and Kenya Electrical Transmission Company (KETRACO) as well as suspended the procurement process for the expansion of Jomo Kenyatta International Airport (JKIA) "based on the information provided to us by our partner nations".
Similarly, French oil and gas company TotalEnergies also announced that it was putting on hold any further investments in Adani Green Energy due to the US indictment. In a stock market filing, Adani Green said that the French firm's statement won't have any "material impact" on its operations or its growth plan.
TotalEnergies continued to be a 50% stakeholder in projects involving Adani Green, industry sources remarked.
Meanwhile, in Bangladesh, a committee constituted by the interim government headed by Muhammad Yunus has recommended an audit of the power agreement signed between the former Sheikh Hasina government and Adani Power Jharkhand Limited (APJL).
"The US indictment and the subsequent announcements in other countries affected Adani's market capitalisation and caused some volatility in the stock markets in recent weeks," industry sources stated.
