Mumbai: Adani Ports and Special Economic Zone Ltd (APSEZ), the ports and logistics arm of Adani Group, announced that it had concluded the sales of its newly constructed container terminal to a little-known overseas firm Solar Energy Ltd. in Myanmar for a total consideration of $30 million
The firesale of the ambitious port project was triggered by sanctions imposed by the U.S. on Myanmar Economic Corp. Ltd (MEC), a Burmese military-controlled company which had leased out the land to APSEZ for the port project.
The company is estimated to have spent over $150 million erecting the terminal and will be forced to take a hit of about $120 million on its balance sheet. In a 2021 regulatory filing, APSEZ disclosed that it had already invested around $127 million (including the upfront payment for the land lease) in the Myanmar Port project. ITD Cementation India Ltd was executing the project on an EPC basis.
In May 2019, APSEZ announced that it had received approval from the Myanmar Investment Commission to develop, operate and maintain Ahlone International Port Terminal 2 (AIPT 2) on 54 acres of land, with a 630-metre jetty.
The first phase of the new terminal was built with a capacity to handle 150,000 twenty-foot equivalent units (TEUs). The project’s second phase is planned to enhance the handling capacity to 800,000 TEUs.
The AIPT 2 is part of the Yangon Port Cluster, which includes the Asia World Port Terminal and Myanmar Industrial Port. Along with Myanmar International Terminals Thilawa, located south of Yangon, the Yangon cluster handles 90 per cent of Myanmar’s exports and imports.
The private multi-port operator began constructing the $290 million AIPT 2 on land leased by the military-backed MEC. APSEZ paid $30-50 million as fees for the leader agreement. However, MEC faced U.S. sanctions along with other military-controlled organisations and individuals running the country after an army-led coup ousted the country’s elected government.
The infrastructure behemoth eventually decided to exit from its investments in Myanmar following the geopolitical situation due to military coup in the country and the economic sanctions imposed by the US.
Karan Adani, CEO of APSEZ, said in a statement, “This exit is in line with the guidance provided by the APSEZ board based on the recommendations made by the risk committee in October 2021.”
APSEZ’s latest decision to sell the port for $30 million represents a setback to the group, given its announcement in May 2022 stating that it signed a share purchase agreement for the sale of Myanmar assets at a price that will enable it to recover the entire investment.
Adani’s port foray in Myanmar was viewed by observers as a geopolitical counter by India to Chinese investments in Sri Lanka’s Hambantota port and Pakistan’s Gwadar port, with Chinese attempting to encircle the region with its Belt and Road initiative.
