India’s Adani Group has decided to withdraw its application for a US government-backed loan to fund the construction of a port in Sri Lanka, as revealed in company filings. The port project was initially seen as a strategic response to a competing Chinese initiative in the region.
The decision follows a recent indictment in New York that accused Gautam Adani, the billionaire founder of the conglomerate, of misleading international investors in connection with an alleged bribery scheme.
Adani Ports and Special Economic Zone Ltd, a subsidiary of the group, announced on Tuesday that it would no longer seek a $553 million loan from the United States International Development Finance Corporation (DFC) to develop the Colombo West International Terminal, a deep-sea port.
According to the company, the project remains on schedule and is expected to be operational by early next year. “The project will be financed through the company’s internal accruals and capital management plan,” the statement said.
The port, estimated to cost $700 million, is located near a similar Chinese-operated facility. The loan agreement with the DFC, finalized last year, was initially perceived as a countermeasure to China’s expanding influence in the Indian Ocean.
Sri Lanka, situated on a key maritime route connecting the Middle East and East Asia, holds significant strategic importance due to its geographical location. Both India and the United States have raised concerns that China’s presence at Sri Lanka’s Hambantota port could offer Beijing a military advantage in the region.
Following the November indictment against Adani, Sri Lankan authorities launched an investigation into the conglomerate’s local ventures, including the port project and a $442 million wind power agreement.
Adani Group has faced a substantial financial impact, with nearly $55 billion in market value erased since the indictment. US prosecutors have accused Gautam Adani and senior officials of bribing Indian government representatives.
The conglomerate, which operates across sectors such as coal, airports, cement, and media, has previously endured allegations of corporate fraud. In 2023, it suffered a major financial setback when its market value plummeted by $150 billion following a report by Hindenburg Research accusing the group of “brazen” fraudulent practices.
