The Vizhinjam deep sea port project has been the mother of all challenges for the Adani Group, the concessionaire that won the mandate from the Kerala government in 2015. Although the contractual deadline for completion of Phase I of the Rs 7,525-crore project ends in December, 2019, it is likely to be breached by at least two months.
Failure to meet the deadline would entail a penalty of Rs 12 lakh per day for the Ahmedabad-based company. The Kerala government is yet to concede the port concessionaire’s plea for extension of the deadline.
The very geography that was cited as the project’s USP has been proving a Gordian knot for the concessionaire. Besides its proximity to the international east-west shipping route, the port site enjoys a natural draft depth of 18.4 m that was expected to minimise dredging costs. “However, due to torrid undercurrents, building the 3.1-km-long breakwater has been proving a nightmare,” says Noushad Khan, a contractor for the project.
Cyclone Ockhi of November, 2017, made matters worse, undoing more than a month’s work on the breakwater. It was also amidst the post-Okhi crisis that Santosh Mohapatra, the then CEO of Adani Vizhinjam Port Private Ltd (AVPPL), resigned. “We are bringing in another dredger to speed up the work, but because of the cyclone, we lost almost a whole season of port-building mandays,” says an AVPPL official.
Sourcing of granite is another issue. Needing 80 lakh tonnes of granite boulders to build the breakwater, AVPPL has been facing a shortage. It was only after months of disputes that the developer decided to go for captive granite quarries, with the state government stepping in for assistance. “They have applied for NOC to mine granite at five sites each in Thiruvananthapuram and Kollam districts. One has been okayed so far,” says K Vasuki, collector of Thiruvananthapuram.
Of the Rs 7,525-crore project, the Adani Ports and Special Economic Zone (APSEZ) is contractually bound to complete the Rs 4,089-cr portion. In what is a good augury, the hurdles in the way of the leftover work have been cleared. The Progress Report of the state government says, “565-metre breakwater is completed. Construction of 800-m berth will start soon. Dredging and land reclamation are 40% over.”
To make up for lost time, AVPPL has accelerated the pace of work. Besides the extra dredger, an order has been placed for 32 cranes, some in the 72-metre category. Although the delay has increased costs, the long-term viability of the project remains strongly intact. Besides the fact that the port is envisaged to handle 4.1 million containers annually, including ultra-large mother-ships, the concessionaire enjoys a tenure of 40 years. The project has also earned two policy spurs. One, Vizhinjam would be the first port to qualify for the Centre’s Viability Gap Funding, receiving Rs 1,635 crore. Two, the Centre has designated it as an immigration check-post for international ships and cruises entering and exiting India. What that means is the concessionaire’s troubles are temporary in nature.