Stake sale at Vizhinjam: empowered panel may take 3-4 months to submit its report

It has been around two weeks since the Cabinet directed the empowered committee to study the proposed 49% stake sale in Adani Vizhinjam Port Private Ltd. (AVPPL), the concessionaire operating the Vizhinjam deep-water transshipment port, to Terminal Investment Ltd. (TiL), the port operating arm of the Mediterranean Shipping Company (MSC) Group. However, the committee, headed by the Chief Secretary, has yet to examine the nuances of the stake sale or complete the exercise.

The State government is moving cautiously after the proposed stake sale courted controversy, with the port operator allegedly violating Clause 5.3.1 of the concession agreement, which stipulates that “the Concessionaire shall not undertake or permit any ‘Change in Ownership’ of the port company, except with the prior approval of the Authority.”

However, Clause 5.3.2 of the concession agreement between the State government and Adani Ports also makes it clear that the State’s approval should be limited to considerations of national security and public interest. It also states that the ‘Authority’ (the State government) shall endeavour to convey its decision on the approval ‘expeditiously’ after a formal request was placed.

The government order entrusting the empowered committee with studying the proposal makes it clear that the committee, if required, can prepare a detailed questionnaire seeking information from the port concessionaire on aspects such as the stake sale process, ownership, administrative rights, the status quo regarding security clearance, the process for maintaining the port as a common user facility, and the financial structure etc. However, according to sources, the committee has not yet approached AVPPL seeking any such details.

According to the order, the State can also seek inputs from the Centre, including the Ministry of Ports, Shipping and Waterways, the Ministry of Home Affairs, and other security agencies, before taking a final decision on granting approval for the stake sale. Although the Adani Group is expecting the State government to take a decision around the launch of full-fledged export-import (EXIM) cargo operations at the Vizhinjam International Seaport, officially scheduled to commence on August 18, State government sources said it would take at least three to four months to complete the process at the committee’s current pace.

The other members of the committee include the Principal Secretary to the Chief Minister, the Principal Secretary (Finance), the Secretary (Ports), the Secretary (Law), and the Managing Director of Vizhinjam International Seaport Ltd., who serves as the committee’s convenor.

Although the concession agreement signed in 2015 states that the concessionaire shall manage and operate the port on a common user basis and provide non-discriminatory access to vessels, vehicles, shipping lines, shippers, receivers, forwarders, and other users in accordance with the provisions of the agreement, and shall refrain from adopting any unfair or discriminatory practice against any user or potential user, there are apprehensions that the State’s interests could be compromised in the event of a change in the company’s ownership. Following these concerns, the State government directed the empowered committee to study the proposal and submit a detailed report before granting approval for the stake sale.