Monday, June 17, 2024
HomenewsUS to fund $553m deep-sea terminal in Sri Lanka

US to fund $553m deep-sea terminal in Sri Lanka

The United States will lend more than $550m for a deep-sea container terminal in Sri Lanka, officials say, with the project seen as countering China’s rising influence in the Indian Ocean.

Sri Lanka sits astride the world’s busiest shipping route, which links the Middle East and East Asia, giving its maritime assets strategic importance.

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The new Colombo West International Terminal will be 1.4km long, 20 metres deep (0.16 miles long, 66 feet deep) and have an annual capacity of 3.2 million containers.

It is being built by a consortium led by India’s Adani Group – which earlier this year denied accusations of “brazen” corporate fraud by a US-based short seller.

The Adani facility has an estimated cost of $700m and is located immediately next to a similar Chinese-run jetty at the capital’s sprawling port.

The US government-run International Development Finance Corporation (DFC) said it was providing $553m in funding for the Adani-led project.

The project, financed with private loans, is billed as providing critical infrastructure for the South Asian island nation with the potential to “transform Colombo into a world-class logistics hub at the intersection of major shipping routes and emerging markets,” said the corporation.

“Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters,” DFC chief Scott Nathan said in Colombo on Wednesday.

The US-backed financing comes at a time when Sri Lanka is struggling to recover from a dire financial and economic crisis.

The DFC was established five years ago in response to China’s massive global infrastructure-building campaign, known as the Belt and Road Initiative. Through it, Beijing has invested tens of billions of dollars each year to build roads, railways, ports and airports, typically in developing nations, to foster trade.

Some of those projects have raised controversy, among them Sri Lanka’s Hambantota Port, on its southeastern coast. Sri Lanka borrowed heavily from China to build the port and other infrastructure including an airport and a city being built on reclaimed land.

The projects have failed to earn enough revenue to pay for the loans, and in 2017, Sri Lanka leased the seaport in Hambantota to China. The deal, which gave the Chinese company a 99-year lease, raised fears about Beijing’s use of “debt traps” in exerting its influence abroad.

Meanwhile, China’s maritime activities around Sri Lanka have also raised red flags for regional power India in recent years. Two of Beijing’s submarines used the Chinese-run jetty next to the Adani development in 2014, despite strong opposition from New Delhi.

India and the US have expressed concerns that a Chinese foothold at Hambantota could give Beijing a military advantage in the Indian Ocean. Last year, the port hosted a Chinese research ship that India accuses of spying.

Sri Lanka, however, insists it will not allow its ports for any military use against any other country.

Source: News Agencies

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