The case charged against billionaire Gautam Adani and seven others in an alleged multibillion-dollar bribery and fraud scheme in the United States has raised concerns about the commitment made by the Adani Group in Kerala in connection with the development of the Vizhinjam International Seaport.
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The case charged against billionaire Gautam Adani and seven others in an alleged multibillion-dollar bribery and fraud scheme in the United States has raised concerns about the commitment made by the Adani Group in Kerala in connection with the development of the Vizhinjam International Seaport.

Gautam Adani indicted in US bribery scheme LIVE

The port, which is billed to redefine Indian maritime business with its geographical proximity to the international shipping lane linking the maritime hubs in South Asia, Southeast, and West Asia, is scheduled to be commissioned in December this year (2024) or early January next. The latest controversy, it is believed, is likely to throw a spanner in the works for the second phase of the port’s investment over the next four years, which is an estimated ₹9,700 crore. 

However, in a conversation with The Hindu, a senior officer of the Adani Group downplayed the crisis. “Hardly ₹10,000 crore is required for the second phase of expansion of the Vizhinjam port and ₹1,300 crore for the redevelopment of the Thiruvananthapuram International Airport, which was taken over by Adani Group three years ago. This is not a big deal considering the financial position of the company. Further, this is not the first time panic has gripped the market with the company being falsely targeted by vested interests. We are sure that this too shall pass as in the past,” he said.

The Vizhinjam seaport project had missed several deadlines and was dragged into arbitration proceedings after the Adani Group failed to honour the provisions in the agreement signed between Kerala in 2015, according to which the port was to be commissioned in 2019. Later, the Kerala government walked the extra mile to bring the project on track by ending the arbitration proceedings against the port concessionaire halfway through, foregoing the ₹219 crore it was entitled to receive from the concessionaire for delaying the project for some five years.

Interestingly, the Kerala government, which develops the seaport under a Public Private Partnership (PPP) model with Adani Vizhinjam Private Port Limited (AVPPL), had maintained that the arbitration proceedings initiated against the Adani Group had to be withdrawn to make available the viability gap fund (VGF) of ₹817.80 crore allocated by the Central government to the AVPPL. But, in a recent development, the Centre asked Kerala to repay the VGF through revenue sharing, and this would cause an additional financial strain of ₹10,000-12,000 crore on the State government as the VGF would have to be paid back in net present value (NPV) terms through revenue sharing.

One of the conditions set by the State for extension of the deadline of the project to December 2024 was that the second phase of the port development should be completed by 2028, instead of the previous deadline of 2045. 

Not concerned about case: Ports Minister

Kerala’s Minister for Ports V.N. Vasavan told The Hindu that the Kerala government, which contributed ₹5,595 crore of the ₹8,867-crore project in the first phase, was not concerned about the latest case affecting the project as the work on the first phase was over and the trail run had seen the berthing of about 54 container vessels, including some really big ones.

The port, he said, had contributed over ₹8 crore to the exchequer by way of tax. It was also in their [Adani Group’s] interest to begin the second and third phases at the earliest as the port opened a huge potential for the country as evidenced in the trial run, Mr. Vasavan added. 

Opposition legislator M. Vincent, however, said that while the State had been confident in the group given their track record of developing ports over the years, the latest developments looked ominous for Kerala.

Thiruvananthapuram:

Kerala Chief Minister Pinarayi Vijayan on Sunday flagged-in the first ever ship at the Rs 7,700 crore deep-water international Vizhinjam port.

Chief Minister Vijayan, joined by Leader of Opposition in the assembly VD Satheesan, Minister of State for External Affairs V Muraleedharan, Congress MP Shashi Tharoor and various state ministers, waved a green flag signalling the tugboats to push the huge Chinese ship — Zhen Hua 15 — from the wharf to the docking yard.

The tugboats pushing the vessel, which carries huge ship-to-shore and yard cranes, also gave it a water salute.

As the vessel touched the dock, firecrackers were burst and balloons released to welcome it.

Hundreds of people, across all age groups, arrived at the port area to see the ship arrive at the dock.

Zhen Hua 15 — which began its journey from China at the end of August, was scheduled to dock at Vizhinjam on October 4, but its journey got delayed due to bad weather conditions along its route.

On reaching Indian coastal waters, it first went to Mundra port in Gujarat to offload some cranes there and then proceeded towards Vizhinjam.

The Vizhinjam port is being constructed under the public-private partnership model. The Adani Group is the private partner in the development of what will become one of the largest ports in the world, once commissioned.

The project, scheduled to be commissioned in 2019, was delayed due to several issues related to land acquisition.

Vizhinjam witnessed violent protests as fishermen in the area opposed the project, alleging that the port would adversely affect their livelihood.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

When Zhen Hua 15 – a heavy-load cargo carrier sailing from the East China Sea – unloads at Vizhinjam port this Sunday, it’ll do more than just set down the site’s first gigantic cranes. It’ll also put India on the map for the world’s biggest container ships.

Located near the southernmost tip of the country, the Vizhinjam transshipment container port – the first of its kind in India that will be inaugurated today – will allow India to grab a bigger slice of the international maritime trade currently dominated by China. It will also bolster its aspirations to be an alternative manufacturing hub by reducing logistics costs for cargo coming to and from the country. 

The new terminal will be another feather in the cap of Gautam Adani’s conglomerate. With a dominance that already spans ports, mines, airports and power utilities, Vizhinjam will further cement the billionaire’s status as India’s infrastructure king. 

The proximity to the international shipping routes that account for 30% of global cargo traffic and a natural channel that goes up to 24 meters below the sea makes Vizhinjam an ideal hub for some of the world’s biggest ships to call in. Until now, the biggest container ships have been skipping India because its harbors weren’t deep enough to handle such vessels and docking at neighboring ports such as Colombo, Dubai and Singapore. 

Transshipment refers to transferring cargo from an original ship to another, bigger mother ship at a port on the way to the cargo’s final destination. 

The much-awaited deep-sea port along Kerala’s scenic coastline has been developed by Adani Ports and Special Economic Zone Ltd. in collaboration with the local state government. Adani Ports, India’s largest private sector port operator with a 30% market share, is also developing Israel’s Haifa port and plans to build a hub in Vietnam, as part of its expanding global footprint.

“The Indian Ocean is 50% of sea trade,” said Chakri Lokapriya, chief investment officer at TCG Asset Management Co. in Mumbai. “The Vizhinjam port with its natural advantages will improve operating margins for Adani Ports.”

Poor shipping connectivity has hindered India’s integration into the global value chain, the Reserve Bank of India said in a 2022 report. India’s container traffic was only 17 million TEUs in 2020 versus China’s 245 million TEUs, according to a Feb. 7 statement from the ports ministry.

The Narendra Modi-led government told the parliament that may change soon. 

‘World’s Factory’

“The upcoming ports at Vizhinjam (Kerala) and Vadhavan (Maharashtra) have natural drafts in excess of 18 meters that would enable ultra large container and cargo vessels to call on the ports thereby boosting the efforts to make India the world’s factory” by improving the container and cargo traffic, the ministry said in the statement.

Vizhinjam port, according to Adani Ports website, will offer a quick turnaround of vessels including Megamax container ships. It will have a capacity of 1 million twenty-foot equivalent units, or TEUs, in the first phase at an investment of 77 billion rupees ($925 million). About 6.2 million TEUs will be added in the subsequent phases.

Still, running a transshipment container terminal won’t be an easy feat, even for a company with as rich an experience as Adani Ports which has already faced fishermen protests at this site. A rival facility in Vallarpadam, operated by Dubai Ports World, has been dogged by procedural delays. 

The transshipment hub also needs to be connected by a network of road and rail links to warehouses and factories in the hinterland. Lack of such arterial support “can be the Waterloo” for any port, said Mathew Antony, managing partner of Aditya Consulting, an advisory specializing in infrastructure, ports and logistics.

Strategic Location

The Centre is working on a Maritime India Vision 2030 that seeks to develop world-class mega ports, and transshipment hubs and modernize infrastructure at an estimated investment of 1.25 trillion rupees. 

As large ships become increasingly more vital to Europe and China trade, India can embed itself in that route, given its strategic location between the Suez Canal and the Strait of Malacca.

India’s current container traffic is less than 10% of China’s but if the Vizhinjam port is able to beckon more ships, it’ll give India – and Adani Ports – a stronger footing in global maritime trade.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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