Adani Ports May Abandon Myanmar Terminal Project Over Sanctions Risk
Adani Ports and Special Economic Zone Ltd declared last week that it could terminate its Myanmar Container Terminal project if the development turns out to be affected by U.S. sanctions.
Two years back, in May 2019, Adani Ports expressed its intention to set up a container terminal at Yangon, Myanmar, and had reached an agreement with the country's democratically elected government. Adani Group had agreed to invest as much as $290 million in the project.
In a coup d'état on February 1, Myanmar's military overthrew the democratically elected parliament. The crisis had drawn international attention and U.S. President Joe Biden has issued sanctions against Myanmar's military rulers.
In the midst of this crisis, Adani Group was reported to pay up to $52 million to a Myanmar military-controlled company as part of the port deal. The same company was hit with U.S. sanctions over alleged human rights violations.
In recent developments, Adani Group has shown disinterest in continuing the Myanmar Container Terminal project. Recently, the company declared, "In a scenario wherein Myanmar is classified as a sanctioned country under the Office of Foreign Assets Control (OFAC), or if OFAC opines that the project violates the current sanctions, [Adani Ports] plans to abandon the project and write down the investments."
A recent report released by an Australian human rights group cites leaked documents that indicate that Adani Group will pay up to $30 million in lease fees to the Myanmar Economic Corporation (MEC), a military-controlled company sanctioned by the United States.
The Adani Group denies the allegations. "Adani Ports has a zero-tolerance policy on sanctions and will ensure that there is no contravention of the U.S. and other sanctions," the company said on Tuesday, adding that it has engaged U.S.-based law firm, Morrison Foerster, to ensure compliance.
Human rights activists have criticized the Adani Group over the deal, asserting that the firm should be held accountable for doing business with MEC.
Adani Ports and Special Economic Zone Ltd is India's largest private port operator, having a majority stake in over 12 major ports along the Indian coast.