Adani-backed Port Terminal in Colombo Begins Operations

On April 6, 2025, the Adani Ports and Special Economic Zone Limited (APSEZ) officially commenced operations at the Colombo West International Terminal (CWIT) in Sri Lanka, marking a significant milestone in regional maritime infrastructure and India-Sri Lanka cooperation. This $800 million project represents one of the most substantial recent investments in Sri Lanka’s port infrastructure and introduces advanced automation to the strategically important Colombo Port.

Terminal Specifications and Operational Details

Infrastructure and Capacity

The CWIT project features a state-of-the-art container terminal with impressive specifications:

• Total investment: $800 million
• Quay length: 1,400 meters
• Depth: 20 meters
• Annual handling capacity: Approximately 3.2 million Twenty-foot Equivalent Units (TEUs)
• Location: Adjacent to the China-backed Colombo International Container Terminal (CICT) at Sri Lanka’s strategic port in Colombo
• Automation: First fully automated deep-water terminal in Colombo Marine Insight News Network

According to Adani officials, the terminal’s automation technology is designed to enhance cargo handling capabilities, improve vessel turnaround times, and elevate the port’s status as a key transshipment hub in South Asia The Hindu.

Ownership Structure and Development Model

The terminal has been developed under a 35-year Build-Operate-Transfer (BOT) model by a consortium comprising:

• Adani Ports and Special Economic Zone Ltd. (APSEZ): 51% stake
• John Keells Holdings (a Sri Lankan conglomerate): 34% stake
• Sri Lanka Ports Authority (SLPA): 15% stake The Hindu

Construction of the terminal began in early 2022, nearly a year after the agreement was signed in September 2021 idrw.org.

Current Operational Status

While the terminal has officially begun operations as of April 6, 2025, the inaugural call by a vessel is expected in May 2025. This initial phase represents the beginning of commercial operations, with full capacity utilization expected to ramp up in the coming months The Hindu.

Economic and Strategic Significance

Economic Impact on Sri Lanka

The CWIT project is expected to deliver substantial economic benefits to Sri Lanka:

1. Job Creation: According to Gautam Adani, the project will create thousands of direct and indirect jobs locally. More than 95% of those employed at the terminal are young Sri Lankans The Hindu.
2. Revenue Generation: The Sri Lankan government views the project as an opportunity to boost revenue at the Colombo Port, enhancing the country’s economic prospects The Hindu.
3. Foreign Investment: The $800 million investment represents one of the largest private-sector investments in Sri Lanka, particularly significant given the country’s recent economic challenges Marine Insight News Network.
4. Trade Enhancement: With 70% of traffic from the Colombo Port either originating from or destined for India, the terminal is expected to strengthen trade links between the two countries and boost regional commerce Frontline – The Hindu.

Regional Maritime Strategy

The CWIT has significant strategic implications for the regional maritime landscape:

1. Competitive Position: The terminal will compete with other major terminals in Colombo, including:
   • The China-backed Colombo International Container Terminal (CICT), which handled 3.3 million TEUs last year
   • The SLPA-operated terminals (Jaye Container Terminal and East Container Terminal), which handled a combined 2.4 million TEUs
   • The South Asia Gateway Terminal (SAGT), run by John Keells Holdings, which managed 2 million TEUs Marine Insight News Network
2. Regional Hub Status: The project aims to strengthen Sri Lanka’s position as a regional maritime hub, enhancing its importance in global shipping lanes The Diplomat.
3. Enhanced Efficiency: As the first fully automated deep-water terminal in Colombo, the CWIT is expected to set new benchmarks for operational efficiency in the region Maritime Executive.

Geopolitical Context

The development of the CWIT carries significant geopolitical implications:

1. India-China Competition: The project is widely seen as India’s strategic counter to China’s Belt and Road Initiative in South Asia. With the China-backed CICT already operating in Colombo, the Adani-backed terminal provides India with a strategic foothold in this crucial maritime location Chemanalyst.
2. US Involvement: Initially, the US International Development Finance Corporation had announced a $553 million loan to support the CWIT project, highlighting its strategic importance in the broader Indo-Pacific strategy to counter Chinese influence Chemanalyst.
3. Regional Balance of Power: The terminal enhances India’s ability to compete with China for influence in Sri Lanka and the broader Indian Ocean region, potentially altering the regional balance of power The Diplomat.

Chairman Gautam Adani termed the commencement of operations “a milestone” in India-Sri Lanka regional cooperation and said the terminal placed Sri Lanka “firmly on the global maritime map” idrw.org.

Controversies and Challenges

US Loan Withdrawal

In December 2024, Adani Ports announced its decision to withdraw from a $553 million loan agreement with the US International Development Finance Corporation (DFC) for the CWIT project. The company stated it would instead finance the project through internal resources and its capital management plan Chemanalyst.

This decision came after:

1. US prosecutors indicted Gautam Adani and seven others in November 2024 for an alleged bribery scheme
2. The DFC requested amendments to the loan agreement
3. The financing had not been processed by the time Adani Group withdrew from the loan deal Maritime Executive

Despite these developments, the project proceeded on schedule, demonstrating the Adani Group’s commitment to completing the terminal.

Bribery Allegations and Legal Challenges

The CWIT project faced increased scrutiny after US prosecutors indicted Gautam Adani for an alleged bribery scheme. Although Adani has denied these allegations, the controversy led to repercussions for the group’s international projects, with some countries, such as Kenya, canceling deals with Adani companies Maritime Executive.

The controversy is part of a broader pattern of challenges for Adani’s projects in Sri Lanka:

1. The Adani Group’s wind power projects in Mannar and Pooneryn have faced criticism for bypassing competitive bidding and being approved at higher rates than local firms offered
2. Five Supreme Court cases have challenged procurement processes and land lease terms for various Adani projects in Sri Lanka
3. Critics have argued that some deals prioritized Adani’s profits over public welfare The Diplomat

Local Opposition

While the port project has generally proceeded with less controversy than Adani’s energy projects in Sri Lanka, there were some protests in Colombo over the handing over of a “national asset” to a foreign company. However, these did not gain significant traction, partly because China already operates a terminal at the Colombo Port Frontline – The Hindu.

Political Sensitivities

Recent developments indicate ongoing political sensitivities surrounding the project:

1. Indian Prime Minister Narendra Modi reportedly declined an invitation to visit the newly commissioned Adani-operated terminal during a trip to Sri Lanka SL Guardian
2. The CWIT project has been portrayed as both a commercial venture and a strategic asset in India-Sri Lanka relations, blurring the line between corporate investment and strategic diplomacy The Diplomat

Market Impact and Business Outlook

Stock Market Reaction

The commencement of operations at the CWIT had a positive impact on Adani Ports’ stock performance. According to market reports:

1. Adani Ports shares rose by nearly 4% after the announcement of operations at the CWIT
2. This came after a period of decline, with the stock having fallen 9% from its previous high
3. Analysts maintained a positive outlook, with an average target price suggesting potential upside from current levels Economic Times

Future Prospects

The CWIT project forms part of Adani Ports’ broader strategy to expand its global footprint and establish itself as a major player in international maritime infrastructure:

1. The terminal strengthens Adani Ports’ position in the transhipment market in the Indian Ocean region
2. The successful completion of this project despite international challenges demonstrates the group’s capability to execute large-scale infrastructure projects
3. The company is reportedly exploring additional opportunities in neighboring countries such as Bangladesh, East African nations, and Southeast Asian countries Logistics Insider

Conclusion

The commencement of operations at the Colombo West International Terminal represents a significant development in South Asian maritime infrastructure and regional geopolitics. Despite controversies and challenges, the $800 million project has proceeded on schedule, demonstrating the strategic importance of this development for all stakeholders.

For Sri Lanka, the terminal offers economic benefits through job creation, revenue generation, and enhanced trade capabilities. For India and the Adani Group, it represents a strategic foothold in a key location and a demonstration of India’s growing influence in the region. For the broader Indo-Pacific, it adds another dimension to the complex geopolitical dynamics between India, China, and the United States.

As the terminal moves towards full operational capacity in the coming months, its impact on regional trade patterns and strategic relationships will become increasingly apparent. The success or failure of this venture will likely influence future infrastructure partnerships between India and neighboring countries, as well as the broader competition for influence in the Indian Ocean region.