Kerala awards Vizhinjam port project to Adani

Work on the ₹7,524-crore (first phase) of the Vizhinjam international deepwater multi-purpose port is expected to begin on November 1 this year.

Kerala Ports Minister K Babu said this after a meeting of the state cabinet decided to award the mega project to Adani Ports and SEZ, the sole bidder.

Sole Bidder

Only Adanis had put up the bid when the last date for submitting the tender ended on April 25. Vizhinjam will be a gift for the people of Kerala on November 1, the State Formation Day, Babu said.

The contract is for building port superstructure and operating the port for a period of 40 years including the four years of construction. When completed, it would have the capacity to berth 18,000 TEU mother ships.

While speaking to newspersons, Chief Minister Oommen Chandy said the decision on Vizhinjam is subject to approval from the Election Commission in view of campaigning for by-elections to the Aruvikkara Assembly constituency.

The government hoped to get the necessary clearance since the project was conceived much earlier and had reached advanced stages of awarding when the model code of conduct came into effect.

War of words

While taking the decision on Wednesday morning, the cabinet merely went by a recommendation to this effect by an empowered committee under the Chief Secretary.

The government has been fighting a war of words with the Opposition that refused to buy its line on specifics during an all-party meet convened on June 3. It has continued to air its differences in public since then.

The government, on its part, sought to prevent a bad situation from going worse by putting up all background material on tenders and other procedures in the public domain.

But it refused to open up any further citing a confidentiality clause which prevented it from going public with ‘sensitive information.’ This could be made public only after the agreement with the Adanis was signed.

Revenue share

The Chief Minister said that there would not be any change in tender terms and conditions than what is provided for already in the draft agreement.

This includes the provision for a revenue share of one per cent to the government from the 15th year of port operations.

This share can go up to 40 per cent going forward; the land is being licensed to the Adanis for a period of 40 years even as the title of ownership rests with the government.

The ₹7,524-crore investment in the first phase works out like this:

The Adanis have demanded a grant of ₹1,635 crore, to be made available in form of a viability gap fund and shared equally by the state and Central Governments, a first for a port project.

The PPP component of the project comes to ₹4,089 crore. The state government will invest ₹1,463 crore to construct the fishing harbour and breakwater under the ‘funded works’ concept.

It will directly spend ₹1,973 crore on land acquisition, supply of drinking water and electricity and rail connectivity.

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