Colombo Sri Lanka (LankaBIZ), Nov 25, 2024 -The Colombo West International Terminal (CWIT) project, partially owned by Adani Ports (51%), John Keells Holdings (34%), and the Sri Lanka Ports Authority, has secured $553 million in funding from the U.S. International Development Finance Corporation (DFC). This project aims to develop a deep-water container terminal at the Port of Colombo, increasing capacity to handle larger ships and enhancing Sri Lanka’s role in regional transshipment operations. Recent allegation against Indian Billionaire Gautam Adani is likely to have a major impact regarding the continuation of the CWIT project. Any such negative outcome is likely to affect the future profitability of John Keells Holdings PLC in Sri Lanka.
The U.S. Securities and Exchange Commission has issued a summons to Indian billionaire Gautam Adani, indicted on U.S. bribery allegations related to a bombshell federal indictment against him, a court filing showed.
Prior to this allegations, the U.S. International Development Finance Corporation (DFC) had agreed to provide over $550 million in financing for the CWIT project in Sri Lanka. Following bribery charges against Adani Group founder Gautam Adani and other executives, the DFC stated it is “assessing the ramifications”
Impact on John Keells Holdings (JKH)
The CWIT investment positions JKH as a key player in Sri Lanka’s maritime infrastructure, with its stake ensuring significant revenue from operations once the terminal becomes functional in early 2025. As transshipment demand grows and the port operates at high capacity, JKH can expect improved profitability. Additionally, the involvement of the U.S. government signals international confidence, potentially reducing funding risks and enhancing credit metrics for JKH.
The WCT is expected to commence operations in the IQ 2025, with the first batch of quay and yard cranes having arrived in September 2024. The allegations against the Adani Group have created uncertainty regarding the future of WCT project of JKH.
Notably, the DFC emphasized that the bribery allegations do not directly implicate the Adani subsidiary involved in the Sri Lanka port project. “We are committed to ensuring that our projects and partners uphold the highest standards of integrity and compliance,” the official added.
Meanwhile, Sri Lanka is separately reviewing Adani Group’s proposed wind power projects. The country’s cabinet is expected to discuss the matter in the coming weeks, according to a spokesman for the Ceylon Electricity Board. The government is assessing the financial viability and environmental implications of the projects.
