Kerala govt mulls Adani plea to review penalty for Vizhinjam port delay

Group had earlier informed govt that project could take 16 months beyond schedule, due to damages caused by Ockhi cyclone in November 2017

The Government of Kerala has said it is analysing a request from the Adani Group to review an earlier decision to penalise the company for not complying with the project schedule as per the agreement. It has also said that the government, through the Vizhinjam International Seaport Ltd (VISL), has written a letter to the Adani Group refusing its request for more time to complete the project, said Ramachandran Kadannappally, Minister for Ports, Museums, Archaeology and Archives.

Adani Group had earlier informed the government that the project could take 16 months beyond the schedule, owing to damage caused by the Ockhi cyclone in November 2017.

As per the concession agreement between the government and the company, the Rs 75.25 billion project is scheduled to be completed by December 4, 2019. However, the company said cyclone Ockhi, which occured on November 30, 2017 had damaged equipment and disrupted construction and that it would take another 16 months to complete the project.

The independent engineer of VISL had submitted a report based on which work has been expedited by increasing the speed of reclamation works using more efficient dredgers.

The Minister, responding to a query in the State Assembly, said that VISL had written a letter to Adani Port refusing its request to extend the time limit stipulated in the agreement.

Besides, as per the concession agreement, 25 per cent of the project cost had to be spent on the 690th day, the second milestone of the project, which was on October 24, 2017. While Adani Port has said that it has spent around 35.8 per cent of the project cost, VISL's internal auditors has assessed that the investment was around 21.75 per cent, excluding some expenditure claimed by Adani Port as the cost of the project. The government said that the company had failed to keep the work on schedule as per the agreement and levied a penalty of Rs 189.6 million.

"The Adani Company has urged the government to review this decision. We are analysing this," said the minister.

Asserting that the company was committed to expeditiously completing the post project, an Adani Group spokesperson asserted that Cyclone Ockhi had, in fact, heavily damaged the dredgers and under construction civil work.

He confirmed that the matter is currently under discussion with the Kerala government.

The Vizhinjam International Transhipment Deepwater Multipurpose Seaport by Government of Kerala is aimed and designed to cater to container transhipment besides multi-purpose and break bulk cargo. The port is being currently developed under a landlord model with the public-private partnership component on design, build, finance, operate and transfer (DBFOT) basis.

The private partner, Adani Vizhinjam Port Private Limited, has commenced the construction on December 5, 2015. Though the concession agreement envisages a construction period of four years, initially the State government and the company had set an ambitious target of 1,000 days to make the port commercially operational.