8 November 2023 (Lloyd's List) - THE US International Development Finance Corporation said it will lend $553m to help build a deepwater container terminal in Sri Lanka’s port of Colombo.

The West Container Terminal will be situated in one of the largest and busiest ports in the Indian Ocean and will serve mostly developing countries in the Bay of Bengal, DFC said.

It comes amid an economic crisis in Sri Lanka and with the US competing with China to offer development finance in the region. China owns another container terminal at Colombo port, through China Merchants Port Holdings.

“Sri Lanka is one of the world’s key transit hubs, with half of all containerships transiting through its waters,” DFC chief executive Scott Nathan said in a statement.

“DFC’s commitment of $553m 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.”

The DFC will lend the money to consortium Colombo West International Terminal is majority-owned by India’s largest port operator Adani Ports and Special Economic Zone with a 51% stake. Sri Lankan conglomerate John Keells Holdings owns 34% and the state-run Sri Lanka Ports Authority 15%. 

The DFC said shipping and logistics are estimated to make up 2.5% of Sri Lanka’s GDP and help sustain more than 40,000 jobs. 

The loan will have a tenor of no more than 20 years from first disbursement.

Adani Ports said the project marks the first time the US government, through one of its agencies, is funding an Adani project.

“We see this as a reaffirmation by the international community of our vision, our capabilities and our governance,” said the company. 

Calculations by the China Africa Research Initiative showed Sri Lanka owed Chinese lenders $7.4bn, or nearly a fifth of public external debt, by end of 2022.