Kerala government’s decision to enter a tripartite agreement with Adani Vizhinjam Private Port Limited (AVPPL), which is constructing the Vizhinjam International Seaport, offered a glimpse into the extraordinary influence exerted by the corporate company on the State government at the highest level.
The State government issued a statement ahead of withdrawing from the arbitration proceedings initiated against the AVPPL, in which the government emphasised that a new tripartite agreement needs to be inked to make available the viability gap fund (VGF) of ₹817.80 crore allocated by the Central government to the AVPPL.
The State argues that the port work would be delayed or the developer would lose VGF if the arbitration was delayed. Among the conditions put forth by the State to extend the deadline to December 2024 now, the main condition was to finish the second and third phases of the port development, which were to be completed by 2045 with an investment of ₹10,000 crore, by 2028.
Face value
However, government sources said if it is the lack of VGF or fund crunches (to the tune of ₹818 crore) that is impacting the completion of phase 1 of the project, how come the developer is expected to fund an additional ₹10,000 crore in the next 4 years from its pocket for undertaking phases two and three. However, the government has given face value to the argument of the company and believes that the concessionaire would be able to source and invest ₹10,000 crore in just four years.
Further, as per the agreement entered between the State and AVPPL, the port developer was to commission the first phase in 2019. After the phase 1 deadline, there is a nine-month cure period (grace period), in which after the first three months, i.e. after March 2020, the AVPPL has to pay damages for not meeting the deadline. As per the current estimation, the firm has to pay a sum of ₹12 lakhs per day to the State for each day of delay, which comes to ₹219 crore now.
With the State agreeing to extend the deadline for the construction by five more years, the State government lost ₹219 crore outright. Second, AVPPL, which was to operate the port for 40 years, including the construction period as per the agreement, received the rights to operate for 45 years, despite failing to honour the phase one construction agreement. The local economy, which was supposed to benefit from the commercial operation of the port in 2019, had to wait until 2024 to get its due.
Bonus for concessionaire
Further, the State government, which was supposed to get a portion of the revenue from the port after 15 years as per the agreement, will get its share only after 20 years now, a double bonus for the concessionaire.
Finally, phases second and third of the project have yet to get environmental clearance. At this junction, waiving off the compensation that the company owes to the State, and giving undue consideration to the developer, who missed deadlines several times in the past under the pretext of a ₹10,000 crore investment offer in four years, is simply yielding to the pressure of the company, sources said.
In fact, the tripartite agreement was suggested by the concessionaire and the Cabinet had only the role of accepting it without any changes. The State yielded to the demands of the company following the high-level political pressure exerted by the Centre, added the source.
