The US will finance a $553 million port facility being planned by Indian billionaire Gautam Adani in Colombo, Sri Lanka as New Delhi and Washington seek to limit China's influence in South Asia.
This will make it the largest infrastructure investment made by the US government agency in Asia and one of its largest worldwide. The financing for the deepwater West Container Terminal in Colombo, will be provided by the International Development Finance Corp, according to a report by Bloomberg.
In addition, the US funding suggests that efforts to lessen Beijing's influence over Sri Lanka are resumed after the country overspent on Chinese port and highway projects prior to last year's economic collapse, leaving it heavily indebted to Beijing. India aspires to shift the regional power dynamics as well.
The money is a part of the $9.3 billion global acceleration of DFC investments in 2023. According to a US official, the financing of the port in Sri Lanka is representative of the US's intention to get increasingly involved in development initiatives throughout the Indo-Pacific region.
As of the end of the previous year, China was Sri Lanka's largest foreign direct investor, having made investments totaling over $2.2 billion. The little-used southern Hambantota port in Sri Lanka has drawn widespread criticism from US officials who see it as unsustainable and a component of China's "debt-trap diplomacy."
Based on their "local experience and high-quality standards," DFC said it will collaborate with sponsors John Keells Holdings Plc and Adani Ports & Special Economic Zone Ltd.
Because of its close proximity to international shipping lines, the port of Colombo is among the busiest in the Indian Ocean. All container ships travel through its waters in over half of cases. The DFC stated that it needs additional capacity despite running at over 90 per cent utilisation for the past two years.
