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New Delhi: Billionaire Gautam Adani has withdrawn from a $553 million loan agreement with the US International Development Finance Corporation (DFC) to fund a port terminal project in Sri Lanka’s capital, Colombo. This development follows allegations of bribery against Adani and other executives of the Adani Group, which surfaced in US courts last month.
In a filing on Tuesday, Adani Ports and Special Economic Zone Ltd., the entity overseeing the Colombo port terminal project, announced that the financing would now be managed through internal accruals and capital management. The company also confirmed it had withdrawn its request for DFC financing but made no mention of the bribery indictment in the US, Bloomberg reported.
The loan deal, signed last year, was a significant milestone in Indo-US collaboration to counter China’s growing influence in the Indo-Pacific region. The deepwater West Container Terminal in Colombo, set to be operational this month, was expected to be DFC’s largest infrastructure investment in Asia.
Scott Nathan, DFC’s chief executive, had praised the project during his visit to Colombo in November 2023, emphasising the US’s strategic interest in the region. Karan Adani, CEO of Adani Ports, had called the deal an endorsement of the group’s vision and governance despite the controversies surrounding it.
However, the US agency later stated that it was still conducting due diligence on the loan when the bribery allegations emerged, preventing the deal from advancing further.
The Adani Group, under scrutiny following allegations that it paid over $250 million in bribes to Indian officials for solar energy contracts, has denied the charges and vowed to fight the claims in court. These accusations have added to the conglomerate’s troubles, including Kenya’s cancellation of $2.6 billion in infrastructure contracts and ongoing financial challenges in other projects.
Construction of the Colombo terminal continues with local Sri Lankan partners, according to the Sri Lanka Ports Authority. The Adani Group has committed to bringing in foreign direct investment for the project as originally planned.
The port, strategically located near international shipping routes, remains a critical asset for regional trade. Sri Lankan officials have indicated that the absence of US funding will not disrupt progress.
Meanwhile, Adani Power Ltd., part of the Adani Group, faces issues with its $2 billion coal-fired power plant in eastern India. The plant, which supplies a tenth of Bangladesh’s power, is struggling with a $790 million payment backlog from Dhaka. The new government in Bangladesh is reviewing the terms of the power-purchase agreement signed by its predecessor amid allegations of corruption, according to a report in the Economic Times.
Adani Power is lobbying the government for concessions to sell electricity domestically, including waivers on customs duties for imported coal. Without these measures, the plant’s viability is at risk, given India’s price-sensitive power market.
The plant’s location within a Special Economic Zone (SEZ) adds another layer of complexity. SEZ regulations currently treat power generated there as imported, subjecting it to taxes that render domestic sales uncompetitive.
This issue echoes broader concerns among manufacturers operating in SEZs, who have lobbied for relief from import taxes on goods meant for domestic consumption.
Despite mounting pressures, the Adani Group has sought to project resilience. Nishit Dave, head of investor relations, stated in an October call that linking the Bangladesh plant to India’s power grid remains an option if the payment crisis persists.
