Adani-MSC deal: State govt. cautious as APSEZ clarifies stance in second letter

The Adani Ports and Special Economic Zone Limited (APSEZ) has written a second letter to the State government, seeking to clarify its position on the proposed deal to sell 49% stake in the Vizhinjam port to the Switzerland-based Mediterranean Shipping Company (MSC).

The State government is treading cautiously, as Adani Vizhinjam Port Private Limited (AVPPL), the concessionaire of the port, has not yet provided a copy of the agreement it signed with MSC. Under the concession agreement signed between the State government and the AVPPL, the government has granted mortgage rights over the port site and its assets to the latter for the concession period. It remains unclear whether the new partner will also enjoy the mortgage rights granted to the AVPPL, a bureaucrat said.

An empowered committee is already in place to take decisions related to the Vizhinjam International Seaport. The State government is also exploring the possibility of constituting a new committee of experts, hand-picked from various sectors, to study the deal and assess its ramifications from the State’s perspective, a source said.

Assurances

In its second letter, the APSEZ sought to assure the State government that, under no circumstances would MSC enjoy a monopoly at the port. It also stated that the port would continue to function as a common-user facility, accessible to all users without discrimination, citing similar acquisitions at other ports in the country. The AVPPL also reiterated its commitment to work with the State government on the ‘Mission Samudra’ project, a maritime development initiative announced by the Kerala government to transform the State into a global economic hub.

But questions arise from various quarters on whether the agreement would give an undue advantage to MSC by allowing it to appoint its subsidiaries to handle seaside and landside logistics, potentially leading to the dominance of a global shipping line at the port. All these aspects will be examined by the State before granting its final approval, government sources said. A month ago, a brief report on the proposed transaction appeared in a daily published from the north. That was the only information available to the State government about the development before the deal came to light, the source said.

The concession agreement stipulates that the concessionaire shall not undertake or permit any change in ownership without the prior approval of the State government. According to the announcement made by the Adani Group, MSC will acquire a 49% stake in the Vizhinjam port company for $1.397 billion (around ₹13,220 crore). MSC will make the investment through its container terminal operating and investment arm TiL.