Gautam Adani, facing legal challenges, has withdrawn from a $553 million loan agreement with the US International Development Finance Corporation (DFC) intended to finance a port terminal in Colombo, Sri Lanka. This decision marks the end of a deal initially lauded as a strategic move by India and the US to counter China’s growing influence in the region.
The withdrawal, announced in a company filing on Tuesday, comes after Adani and other executives were indicted in US courts last month on bribery charges related to solar energy contracts in India. While the DFC stated it was still conducting due diligence on the loan following the indictment, Adani’s filing indicated the project would now be funded through internal resources and capital management. The statement explicitly mentioned the withdrawal of the loan request from the DFC but did not address the bribery allegations. Adani Group has consistently denied these allegations.
The DFC, a US government agency focused on development finance, and the White House have not yet commented on Adani’s withdrawal. The Colombo port project, already under construction with local Sri Lankan partners, was envisioned as the DFC’s largest infrastructure investment in Asia and a key component of US foreign policy in the Indo-Pacific region.
Adani Ports and Special Economic Zone Ltd. logo
Signed in November 2023, the loan agreement initially symbolized a strong partnership between the US and Adani. DFC CEO Scott Nathan emphasized the importance of US engagement in the Indo-Pacific for global economic growth, while Karan Adani, CEO of Adani Ports, viewed the deal as international validation of the company’s vision and capabilities. However, the loan agreement remained unfinalized, and no funds were disbursed before the withdrawal announcement.
Despite the setback, the Sri Lanka Ports Authority has confirmed that the port project is proceeding, with the Adani-led entity expected to secure funding as initially planned. This aligns with the Adani Group’s efforts to maintain business continuity amidst the ongoing legal challenges.
Following the US indictment, the Adani Group reaffirmed its commitment to ongoing projects and announced significant new domestic investments in India. However, the allegations have led to repercussions, including the cancellation of contracts in Kenya. The Colombo port project, strategically located in the busy Indian Ocean, holds significant importance for international shipping routes.
In conclusion, Adani’s withdrawal from the US loan agreement for the Sri Lankan port project represents a significant shift in the geopolitical landscape. While the project continues with alternative funding, the decision underscores the complexities of international development finance and the challenges faced by the Adani Group in navigating legal and reputational hurdles. This development also highlights the strategic importance of the Colombo port in the context of growing competition for influence in the Indo-Pacific region.
