Kerala: APSEZ Fast-Tracks Vizhinjam Port Expansion To Settle Dispute With State Government

Adani Ports and Special Economic Zone Limited (APSEZ) has agreed to expand the capacity of the under-construction international container transshipment port at Vizhinjam in Kerala by 2028, much earlier than the concession agreement timeline.

In exchange, APSEZ will settle arbitration proceedings initiated against the state government over delay in completing the first phase of the port and receive a five-year extension in the concession period till 2060.

The capacity expansion will allow Vizhinjam Port to handle three million twenty-foot equivalent units (TEUs) from a two km-long berth. The Kerala government has agreed to condone APSEZ's delay in completing the first phase by five years, extending the deadline to 3 December 2024.

As per the arbitral tribunal's consent award, the state government will withhold Rs 219 crore due to APSEZ as a commitment fee deposit. Rs 175.2 crores will be released once the second and third phases of the project are completed in 2028, while the remaining Rs 43.8 crore will be retained.

The concession terms have been revised, requiring a supplementary agreement between the parties. This will facilitate the disbursement of viability gap funding (VGF) for the project and the signing of a premium-sharing agreement.

Disasters including cyclones and the Covid-19 pandemic, contributed to the delay in completing the first phase. VGF, a one-time grant for supporting infrastructure projects, will be contributed by the Union and Kerala governments.

The port is designed primarily to cater container transshipment besides multi-purpose and break bulk cargo. The port is being currently developed in landlord model with a public private partnership (PPP) component on a design, build, finance, operate and transfer (DBFOT) basis.

The private partner, the Concessionaire M/s Adani Vizhinjam Port Private Limited, has commenced the construction on 5 December 2015.

The total project cost includes a PPP component of Rs 4,089 crore.

The world-class, future-ready port is the only transshipment hub in the Indian subcontinent, closest to the international shipping routes, and is centrally located on the Indian coastline. It has a natural draft of 20-24 m and minimal littoral drift. 

Vizhinjam Port offers large-scale automation for quick turnaround of vessels with state-of-the-art infrastructure to handle megamax containerships. Its capacity in phase 1 is to be 1 million TEUs and in subsequent phases, another 6.2 million TEUs will be added.