The US Government’s International Development Finance Corporation (DFC) has committed more than $550m to the development of a deepwater shipping container terminal at the Port of Colombo in Sri Lanka.
The agency said the investment showcased the US’ commitment to supporting Sri Lanka’s growth and would “provide critical infrastructure for the South Asian region”.
DFC CEO Scott Nathan said: “Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters.
“DFC’s commitment of $553m in private-sector loans for the West Container Terminal will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of our allies across the region.”
The move has also been seen by many as an attempt by the US to compete with China in the international development arena, due to the country’s previous loans to Sri Lanka to fund infrastructure projects such as the Hambantota Port, leaving the smaller Asian country in debt to the economic giant.
The port is the largest and busiest transshipment port in the Indian Ocean, according to the DFC and has been operating at more than 90% capacity since 2021, which the agency says signals the need for the project to add another terminal.
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Construction of the new West Container Terminal began a year ago in November 2022 and is expected to add another three million TEUs to the port. It was already thought to be the largest foreign investment in Sri Lanka’s port sector thanks to the 51% initial investment supplied by Indian company Adani Ports and Special Economic Zone (APSEZ).
The DFC said it would be working with APSEZ on the project, as well as Sri Lanka-based John Keells Holdings, which provided 34% of initial investment funding.
Julie Chung, US ambassador to Sri Lanka, said: “This financing is symbolic of the United States’ long-standing commitment to the development and well-being of the people of Sri Lanka. Sri Lanka regaining its economic footing will further our shared vision for a free and prosperous Indo-Pacific.”
The project is one of the most expensive marine construction projects currently underway, with an initial cost of $789m and signals Sri Lanka’s attempt to capitalise on its strategic position in the Indian Ocean, along many major shipping routes in the area.