Adani in talks to develop Sabang port in Indonesia

New Delhi: Adani Ports and Special Economic Zone Ltd (APSEZ) is in talks with the Indonesian government to develop the strategically vital Sabang Port, two people aware of the matter said.

The group, which is also developing the Haifa Port in Israel, is considering establishing a new container terminal and transit port facilities at Sabang, located near the Strait of Malacca, a key global trade route, one of the two people said, requesting anonymity.

The initial investment in the project is estimated at close to $1 billion, but the actual investment requirements will be worked out once the company reaches an agreement with Indonesian authorities to develop the port, the person said.

An Adani group spokesperson did not respond to a query seeking comments.

Analysts have emphasized the Sabang port’s strategic and foreign policy significance. The development of this port would allow India easier access to the Malacca Strait, a narrow stretch of water between Indonesia and Malaysia and one of the world’s most important shipping lanes.

In May, Mint reported that after years of discussions, a feasibility study has been completed and is now awaiting approval from the Indonesian government.

The strait is a vital trade route for goods and resources movement between the oil-rich West Asian nations and East Asia. A significant portion of global trade in goods passes through the strait, and most of China’s energy imports rely on this route.

Some experts have suggested that the development of the Sabang Port could enhance India’s strategic position relative to China in the Indian Ocean.

In 2018, Indonesia’s then-coordinating minister for maritime affairs, Luhut Pandjaitan, mooted the idea that Sabang Port could accommodate shipping vessels and submarines. This led to speculation that the port could further India’s strategic aims.

Nonetheless, progress in constructing the port has been sluggish, with ongoing discussions spanning several years. In 2018, both nations established a task force with the aim of improving connectivity between Aceh province and the Andaman and Nicobar Islands.

“The leaders appreciated the decision to set up a joint task force to undertake projects for port-related infrastructure in and around Sabang,” both leaders conveyed in a joint statement during Prime Minister Narendra Modi’s first official visit to Indonesia.

For the Adani group, Indonesian projects would help expand its maritime operations. The group is also exploring developing ports in East Africa (Kenya and Tanzania), Vietnam, and the Mediterranean.