The United States International Development Finance Corporation on Wednesday announced that it will invest $553 million (Rs 4,603 crore) in a port terminal in Sri Lanka’s Colombo that is partly owned by the Adani Group.
The finance corporation is a United States agency that invests in development projects mainly in lower and middle-income countries.
The Adani Group holds a 51% stake in the West Container Terminal of the port, which also has a terminal run by China Merchants Port Holdings Company Limited, a Chinese state-owned company, Reuters reported.
The port development by the Indian conglomerate comes a year after Sri Lanka declared bankruptcy, which led to political turmoil in the island nation. Before the economic crisis hit the South Asian country, Colombo had borrowed huge amounts of money for Chinese port and highway projects.
The loan for the port terminal is the United States government’s largest infrastructure investment in Asia and one of its biggest globally, reported Bloomberg.
The investments in Asia come as the United States looks to counter China’s growing influence in the Indian Ocean region. The port in Colombo is one of the busiest in the Indian Ocean as it is located along major international shipping routes.
“DFC’s [Development Finance Corporation] 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 strengthening the position of our allies across the region,” Development Finance Corporation’s Chief Executive Officer Scott Nathan said in a statement, reported Reuters.
Since January, the Adani Group has lost billions in stock value after American investment firm and activist short-seller Hindenburg Research alleged that the conglomerate was pulling off the “largest con in corporate history”.
Hindenburg claimed that the conglomerate has been involved in accounting fraud, improper use of tax havens and money laundering. The conglomerate has denied the allegations.
Amid these allegations of corporate fraud, the investment by the United States is being touted as an endorsement of the Adani Group.
“We see this as a reaffirmation by the international community of our vision, our capabilities and our governance,” Karan Adani, the chief executive officer of the Adani Ports, told reporters on Wednesday, reported Bloomberg.
The conglomerate has also proposed a renewable energy project in Sri Lanka as the country is “blessed with good winds” on its western coast, Karan Adani said, reported BQ Prime. “We plan to set up a 500-megawatt wind project in the first phase,” he said.