A Project Doomed?

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Unique business model Gautam Adani will be investing less and earning more from the project
Unique business model Gautam Adani will be investing less and earning more from the project

Controversy and Gautam Adani are inseparable. Whether it is the loan sanctioned to him by the State Bank of India (SBI) or his equation with Prime Minister Narendra Modi, Adani continues to be in the news. The allegations against the man in question never end. So, it was not surprising when Adani got embroiled in a fresh controversy over a port project in the Kerala capital, Thiruvanathapuram. The opposition led by the CPM in the state has levelled serious charges of corruption against the ruling Congress-led United Democratic Front (UDF) for approving the bid of Adani Ports and Special Economic Zone (APSEZ) for the development of the Vizhinjam international seaport project. This has forced Kerala Chief Minister Oommen Chandy to convene an all-party meeting on 3 June to take a final call on accepting the bid of Adani group for the project.
The APSEZ is considered to be the biggest private port operating firm in India. It sought Rs 1,635 crore as grant for the proposed Rs 6,700 crore Vizhinjam project. In the first phase, the Adani group will be investing Rs 4,253.2 crore, including the grant of Rs 817.2 crore from the government. The Centre has already cleared the Viability Gap Funding for the project and through this the group will get around Rs 800 crore. According to the agreed terms, the port will be operated solely by the Adani group, which will invest about 32.6 percent of the total cost of the project, while the state government will plough in 56.5 percent and wait for 60 years to earn profit. Herein lies the irony: although it is supposed to be an Adani project, more than half of the project cost will be borne by the Kerala government. This has led many tongues to wag.
The lone bid submitted by the Adani group and the subsequent nod given by the Kerala government prompted many to question the motive behind the moves. The CPM has alleged foul play in awarding the project to Adani. Attacking the ruling party in Kerala, Pinarayi Vijayan, former state secretary of the CPM, said that the chief minister (Chandy) had a secret meeting with Adani at the residence of a Congress MP in Delhi. Later on, Congress MP and former Union minister KV Thomas admitted that he along with the CM and Fisheries, Ports and Excise Minister K Babu had met Adani. However, sources in the Adani group refused to comment on the matter, insisting that the group will go ahead once the UDF gives the final approval.
Initially, five major private companies, including Gammon Infrastructure Projects, the Hyundai-Concast consortium, the SREI consortium, Essar Ports, Adani Ports and OHL (Spanish firm) had expressed interest in the project. But many of them were denied the bid due to security and other feasibility issues. However, when the deadline, which was extended five times, for submitting the final bid for the project ended on 24 April, the Ahmedabad-based Adani group emerged as the sole bidder.
In fact, the project in question has faced many hurdles since its conception more than two decades ago. It got stalled from time to time due to the issues raised by local people to the central government. When the previous LDF (Left Democratic Front) government tried to finalise the bidding process involving a Chinese company, the then UPA government at the Centre refused clearance citing security reasons. The LDF again tried to salvage the project but to no avail. Now, when the Congress-led UDF has approved the bid of APSEZ, the CPM-led opposition has applied the breaks on it yet again.