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Adani Ports and Special Economic Zone Ltd (APSEZ) said it will “abandon” the container terminal it is constructing in Myanmar and “write down the investments” if it is classified as a sanctioned country under the Office of Foreign Assets Control (OFAC) of the US Department of Treasury or if OFAC opines that the project violate the current sanctions.
The write-down will not materially impact APSEZ as it is equivalent to about 1.3 per cent of the total assets.
Rattled by the recent events, Adani Ports and Special Economic Zone Ltd (APSEZ) said it is “pro-actively approaching” the United States Department of Treasury to ensure that it is not in violation of the sanctions imposed by the US on some military holding firms in Myanmar-- where the firm is building a container terminal--- following the February 1 coup.
“In light of the military coup in Myanmar and the sanctions imposed by the US on Myanmar Economic Cooperation Ltd, the company has obtained US-based counsel’s view on its legal compliance position (which confirms that there is no legal no-compliance) and is pro-actively approaching the Office of Foreign Assets Control (OFAC) of US Department of Treasury operations to make sure that it is not in violation of the sanctions due to the recent developments,” APSEZ said while announcing its fourth quarter financial results.
APSEZ is constructing a new container terminal at Yangoon on which it has spent $127 million till March 2021.
S&P Dow Jones Indices removed APSEZ from the Dow Jones Sustainability Indices from April 15, citing the firm’s business links with the Myanmar military that is responsible for the coup that overthrew Burma’s democratically elected government on February 1 and the human rights abuses that followed.
The removal is a setback for the Adani Group which has been striving to raise its sustainability profile for securing access to new debt and equity capital with environmental, social and governance (ESG) risk evaluation increasingly playing a prominent role in global financial markets, a port industry consultant said.
APSEZ is building a new container terminal with an investment of $290 million along Myanmar’s Yangon river on a 50-year deal.
The project is helmed by Adani Yangon International Terminal Co Ltd, a unit of APSEZ.
The Ahlone International Port Terminal 2 (AIPT 2) will be developed over 54 acres of land leased from the Myanmar Economic Corporation Ltd (MEC), which is currently operating AIPT 1.
ITD Cementation India Ltd is undertaking the EPC work for the project.
The project has come under a cloud with the United States imposing sanctions on ten serving and former Burmese military officials responsible for the February 1 coup as well as on Burma’s military holding companies – Myanma Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC).
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