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U.S. International Development Finance Corporation (DFC) to Provide $553 Million Financing for Colombo Port Terminal Project

COLOMBO, Nov 8 (Reuters) – In a significant development, the U.S. International Development Finance Corporation (DFC) has announced its plans to provide $553 million in financing for a Colombo port terminal project. This project is partly owned by India’s Adani Group, marking the company’s first foray into the sector.

This latest development comes at a crucial time for Sri Lanka, as the island nation is grappling with its worst financial crisis in over seven decades. Last year, its foreign exchange reserves hit record lows, leading to a contraction of the economy by 7.8% in 2022.

The west container terminal of the port, in which the Adani group holds a 51% stake, is set to receive the financing from DFC. This terminal also houses a facility run by China Merchants Port Holdings Co Ltd.

In a statement, DFC CEO Scott Nathan highlighted the significance of the financing, stating that the commitment of $553 million in private sector loans for the West Container Terminal (WCT) will expand its shipping capacity, creating greater prosperity for Sri Lanka without adding to sovereign debt. This move also aims to strengthen the position of allies across the region.

India has played a crucial role in supporting Sri Lanka during its financial crisis, extending about $4 billion in swaps and credit lines last year. This support has been instrumental in providing critical assistance for importing fuel, medicine, and fertilizer during the crisis.

The strategic significance of Sri Lanka is apparent as both India and China vie for influence in the island nation, located near busy shipping routes.

It is important to note that the WCT is owned 34% by Sri Lankan conglomerate John Keells Holdings and the remaining stake is held by the state-run Sri Lanka Ports Authority (SLPA).

The terminal project, including dredging, is set to be completed in multiple stages, with the first stage scheduled to be finished in the third quarter of 2024 and the full project slated for completion by the end of 2025.

AI legalese decoder can assist in this situation by providing advanced AI-driven tools to analyze, interpret, and decode complex legal documents related to the financing and ownership structures of the port terminal project. This can help stakeholders navigate the legal and regulatory aspects of the project, ensuring compliance and transparency in their operations.

(Reporting by Uditha Jayasinghe; Editing by Kim Coghill)

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