Home » Gaza War Puts India’s Haifa Port Project In Jeopardy; Adani Confident On Israel’s Largest Deep-Water Port

Gaza War Puts India’s Haifa Port Project In Jeopardy; Adani Confident On Israel’s Largest Deep-Water Port

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Days after the shares of billionaire Gautam Adani’s ports development company saw a significant drop, the group has assured that it is still confident about acquiring the largest deep-water port in Israel despite its escalating confrontation with Hamas.

The 36-year-old head of Adani Ports and the founder’s older son, Karan Adani, stated that the region’s propensity for conflict was considered when the US$1.2-billion investment in the Haifa port was made last year. He was talking to Nikkei Asia.

The statement comes at a time when Israel has launched an all-out war against Gaza as a retaliation for the surprise attacks carried out by Hamas on October 7. The constant air strikes and the news about an imminent ground invasion have given rise to fears of a wider regional conflict, raising concerns among stakeholders and investors.

Just two days after the October 7 attacks, the shares of the Adani Ports And Economic Zone fell as much as 4.5%, triggering an alarm among investors who feared that the ambitious project might run into trouble if the conflict dragged on and other regional players got involved.

Before the inauguration of a new container port in Kerala, Adani said in an interview, “The entire Haifa Port has been designed keeping such the situation in mind. This is not the first time a situation like this has developed.” He added, “The whole port’s security features have been designed keeping in mind such events,” without elaborating. 

Adani further iterated that the Adani Group thoroughly evaluates political risks before investing overseas. On its part, the group has made no bones about its intention to become the largest port operator in the world by 2030 and nearly triple its cargo volume to one billion metric tons.

Israel’s Haifa Port is one of the many ports where the Adani Group puts the money where the mouth is. Karan Adani’s latest assurances may be directed at the investors keenly watching the ongoing conflict. When the shares dropped earlier this month, a company statement said it was ardently monitoring the conflict in Israel and was prepared with a business continuity plan.

“We are closely monitoring the action on the ground concentrated in South Israel, whereas Haifa port is situated in the North. We remain fully alert and prepared with a business continuity plan that will enable us to respond effectively to any eventuality.” Haifa’s contribution to Adani Ports’ numbers is “relatively small” at 3% of the total cargo volume, the statement added.

Just days later, Karan Adani said, “When we look at our risk parameters, we are very confident that at the end of the day, even after this event, the economy of Israel, trade from Israel, and the political stability does not get affected.” 

He sounded optimistic, saying,” We are very confident [in] our investment, as we have taken a very long-term view because such assets come with 30-or-40 30-or-40-year concessions. Our conviction has not changed when we look at it from a 30-40 year perspective.”

The recent round of conflict is not the first time that the Adani Group has found itself cornered. Earlier, the group was accused of accounting fraud and stalk manipulation by the US-based short seller Hindenburg Research, which plummeted its share. The corporation has since managed to recover, but only marginally.

The clear assertion of a recovery plan and the assurances given out by Karan Adani signal the importance the business attaches to Israel’s Haifa Port. The company, nonetheless, managed to redeem itself to some extent. After recording a fall, the shares recovered by 3% as the Company explained that the Haifa Port is located in the North and that Israel’s ongoing conflict with Hamas is primarily in South Israel.

However, with sporadic firing exchanged with Hezbollah in Lebanon now, those assurances may not be sustained. The fears of a more significant regional conflict continue to lurk.

Moreover, there are concerns that traffic in the Strait of Hormuz, which accounts for 35% of the world’s LNG trade, might be disrupted if Iran is drawn into the conflict, as it has been warned about. The strait is the most strategic in the world, as about 21% of the world’s oil travels through this slender maritime lane.

Adani’s Haifa Port In Israel

In February this year, Israel’s envoy to India, Naor Gilon, said that the financially troubled Adani Group had made the complete payment to purchase the port of Haifa from Israel. 

The Israeli envoy emphasized the significance of Adani’s investment as “strategic” and expressed anticipation for additional investments by the firm in other areas of Israel. Following the Hindenburg accusations, the envoy’s remarks coincided with a stock market sell-off for Adani Group companies.

“We have two ports in the Mediterranean. It’s (Haifa) a strategic asset. The fact that we are giving it to an Indian company, from our point of view, is a symbolic sign of deep trust in depositing your strategic assets in the hands of Indian companies,” Ambassador Gilon said.

“Adani Group’s bread and butter are ports. They have the potential to make Haifa port what it needs to be and to utilize it to increase trade between India and Israel. We are delighted with this,” he added. 

Gaza War Puts India’s Haifa Port Project In Jeopardy; Adani Confident On Israel’s Largest Deep-Water Port
Port of Haifa in Israel

This is somewhat true given that Adani’s port company has been actively seeking acquisitions and is constructing a new container facility in Colombo, the capital of Sri Lanka. In addition to that, with 14 locations on the east and west coasts, Adani is currently the largest port operator in India. About 3% of the group’s total port capacity will be accounted for by Haifa.

Adani and a local business jointly run the Haifa Port in northern Israel after paying 4 billion shekels ($1.03 billion). The port is significant because about 99% of all commodities enter and exit Israel through seaports, with Haifa being one of the most important.

Under a slew of economic changes spearheaded by Netanyahu, who has consistently pushed for the sale of public assets in an apparent effort to cut expenses and combat corruption, discussions about privatizing the port have been underway since the early 2000s. 

Much to the dismay of the US administration, China’s Shanghai International Port Group (SIPG) won the 2015 competition to run the Haifa Bayport terminal for 25 years. However, former US Secretary of State Mike Pompeo, when in Israel in May 2020, stepped in and urged Israel to stop its infrastructure projects with China. 

After many back and forths and several bottlenecks faced by the Adani Group, the company managed to bag the contract for the Haifa port.

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