THIRUVANANTHAPURAM: The Kerala government and Adani Vizhinjam Port Private Ltd have finalised a supplementary concession agreement to expedite the completion of the Vizhinjam International Port Project.
This revised deal marks a significant shift in the project’s trajectory, originally set to be completed in phases, with the final phase projected for 2045.
Why revision?
The new agreement follows years of delays caused by various factors, including natural disasters like the Ockhi cyclone, floods, and disruptions during the COVID-19 pandemic. These setbacks led to missed deadlines and increased project costs, prompting arbitration proceedings between the Kerala government and Adani Ports over contractual disputes.
The arbitration process was initiated over disagreements regarding compensation and penalties linked to the delays. With the arbitration now withdrawn and the agreement revised, both parties aim to restore momentum to the critical infrastructure project.
Key changes
Under the original arrangement, the project was structured for phased completion, with the final phase scheduled for 2045. However, under the new terms, the second and final phase of the port will now be completed by 2028, significantly advancing the project timeline by 17 years.
Moreover, unlike the previous agreement, which left room for phased implementation, the supplementary deal ensures the completion of all phases in a single extended timeline. Adani Ports has pledged fresh investments of Rs10,000 crore within the next four years to accelerate construction and meet the revised schedule.
Penalty for delays
Delays have also attracted financial penalties. The Kerala government imposed a penalty of Rs219 crore on Adani Ports for breaching the original timeline. Of this, Rs43.8 crore will be paid immediately to the state, while the remaining Rs175.2 crore will be held back until the revised deadline in 2028.
If the project is not completed by then, the government reserves the right to cancel the five-year extension and recover the withheld amount.
Challenges
The Vizhinjam International Port, a strategically significant transshipment hub, is designed to enhance India’s maritime capabilities. Once completed, it will have a minimum capacity of 3 million TEUs (Twenty-foot Equivalent Units), positioning it as a critical node in global shipping networks.
The project’s delays have been a matter of concern due to its potential to impact Kerala’s economic development. The new agreement addresses these challenges by creating a definitive timeline and ensuring financial accountability from Adani Ports.
The revised agreement is a pragmatic step to fast-track the much-delayed Vizhinjam project. It reflects a mutual understanding between the Kerala government and Adani Ports to overcome past hurdles, accelerate development, and realize the port’s economic and strategic potential.
