Vizhinjam International Seaport: The Adani Saga of Delays, Deals, and Dilemmas

Since the commencement of construction on December 5, 2015, the Vizhinjam International Seaport has been mired in a quagmire of delays and contentious deals, overshadowing its promise as a strategic maritime gateway. With the milestone of 3,000 days since the inception of work, the saga unfolds with revelations of missed deadlines, renegotiated terms, and contentious clauses favoring India’s business magnate Gautam Adani.

Gautam Adani’s initial pledge, made amid much fanfare, to witness the first ship docking at Vizhinjam within 1,000 days, fell by the wayside as deadlines were successively deferred. Originally slated for September 1, 2018, the port’s inauguration was postponed to December 3, 2019, marking the 1,459th day of construction. Now, as the project grapples with its 3,000th day milestone, the finish line remains distant, with crucial infrastructure elements far from completion.

The centerpiece of contention revolves around Adani’s favorable deal structure, raising both eyebrows and tempers. Initially envisaged as an independent Engineering Procurement and Construction (EPC) contract, the scope of ‘funded’ works, including the construction of the breakwater and a new fishing harbor, was revised upwards to INR 1,463 crore, with the entire cost burden shifted to the Kerala government.

Moreover, Adani’s financial burden was further alleviated as the Kerala government assumed responsibility for the entire cost of external infrastructure, such as road and rail connectivity, amounting to a staggering INR 1,973 crore. The skewed financial arrangement paints a picture of disproportionate risk-sharing, with Adani bearing only 33% of the total project cost, while Kerala shoulders a hefty 67%.

The contours of the agreement reveal an asymmetrical distribution of benefits, with Adani securing favorable clauses akin to a ‘farewell gift’ upon project termination. The inclusion of a termination clause, unprecedented in comparable infrastructure projects, entitles Adani to a substantial termination payment, calculated at the realizable fee collected in the project’s final month multiplied by 30, amounting to approximately INR 19,555 crore at the end of the 40-year concession period.

Amidst mounting scrutiny, questions linger over the prudence of Kerala’s financial commitments, particularly in light of projected earnings from the port. Ernst & Young’s feasibility study forecasts Kerala’s earnings at INR 13,947 crore over 40 years, a fraction of the termination payment owed to Adani. The looming financial burden underscores the potential pitfalls of asymmetrically structured public-private partnerships, placing Kerala’s fiscal prudence in the spotlight.

As the Vizhinjam International Seaport grapples with its protracted construction timeline and contentious contractual arrangements, it serves as a cautionary tale of the perils of unbalanced deal structures and the imperative of equitable risk-sharing in infrastructure development. With the project’s fate hanging in the balance, stakeholders are left grappling with the consequences of delayed timelines, renegotiated terms, and the specter of financial overreach in the pursuit of maritime ambitions.

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