Adani Ports and Special Economic Zone Ltd’s (APSEZ’s) move to find a buyer for its under-construction container terminal in Myanmar, which it is exiting due to US sanctions on that nation, could be challenging as potential buyers would not want to face the same wrath unless they are not concerned with the embargo.
APSEZ has decided to exit the container terminal being build in the Yangon region in which it has invested some $150 million, representing less than 1.5 per cent of the firm’s total assets.
“When we say exit, we are in the process of selling the terminal, not abandoning the terminal. We will be running a process of selling and then obviously we would look at what is the best value we are getting from the buyers. We expect to conclude the deal by the end of this financial year,” Karan Adani, Chief Executive Officer, told analysts during the second quarter earnings call.
Positive on buyers
Port industry executives said local business groups in Myanmar or even Chinese entities who are not concerned with or affected by the US sanctions, could be interested in the terminal.
“Being a new facility in Myanmar with scope for export-import trade, buyers will be there,” a port industry executive said.
For Adani, an asset in sanctions-hit Myanmar, would hurt its businesses elsewhere. For instance, the Adani Group is raising huge money for its ports and renewable energy business though dollar bonds from American investors. This would be affected if it continues to be present in Myanmar.
“There could be many companies who are not affected by the US sanctions. Chinese companies could be one, business groups in Myanmar could also be interested,” he said.
The exit from the Yangon terminal is a setback to APSEZ’s strategy to string together a ‘subcontinental ports necklace’ through organic/inorganic initiatives, extending from India to Colombo and Myanmar, with the objective to provide a South Asian logistical solution.
“Such container terminals will be integrated with the existing ports / terminals on the east and south coasts of India, unlocking synergies through multiple entry / exit points for shipping lines with long-standing partnerships / relationships with APSEZ,” the company said in its latest annual report.
In May 2019, Adani Group said it would invest as much as $290 million to build and run a new container terminal along the Yangon River on a 50-year deal.
Adani’s investment in Myanmar gave India a geo-political counter to Chinese investments in Sri Lanka’s Hambantota and Colombo ports and Pakistan’s Gwadar port as Beijing encircles the region with its Belt and Road Initiative (BRI).
The Ahlone International Port Terminal 2 (AIPT 2) is being developed over 54 acres of land leased from the Myanmar Economic Corporation Ltd (MEC), an entity sanctioned by the US following the February 1 military coup against the democratically elected civilian government of Myanmar.
ITD Cementation India Ltd is undertaking the EPC work for the project.
The first phase of the new terminal was expected to start operations by the end of 2020 with a capacity to handle 150,000 twenty-foot equivalent units (TEUs) but has been delayed.
In the second phase, the capacity of the terminal was planned to be expanded to 800,000 TEUs.
Source : The Hindu Businessline
