THIRUVANANTHAPURAM: Chief Minister V D Satheesan has formally conveyed the state government’s displeasure to the Adani Ports management over the trasfer of shares in the Vizhinjam International Seaport to the Mediterranean Shipping Company (MSC) without informing or consulting the government.
The Vizhinjam International Seaport, a long-cherished dream project of the state, became a reality under a concession agreement between the state government and Adani Vizhinjam Port Private Limited (AVPPL), which operates the port on behalf of the concessionaire, Adani Ports and SEZ Ltd (APSEZ). “Changes to the concessionaire’s share structure can only be made with the government’s approval.
The government will decide on its future course of action in this matter only after strictly reviewing the applicable clauses of the concession agreement alongside other regulations and guidelines,” Satheesan said.
The government’s foremost priority is to safeguard the state’s interests while ensuring Vizhinjam Port realises its full potential as a globally competitive transshipment hub, the CM said. The proposed `13,000-crore MSC–Adani deal, billed as the state’s biggest-ever foreign direct investment, is likely to sail through despite triggering a political storm, top government officials familiar with the matter indicated.
The developments gathered pace on Wednesday after APSEZ, the concessionaire, moved swiftly to formally inform the state government of the proposed stake sale. The communication reached the government on the very day the chief minister flagged concerns over the deal in the state assembly.
In its letter, the Adani Group outlined the regulatory provisions and concession agreement clauses that permit the induction of foreign equity from MSC. The approval process will now follow a strict bureaucratic pipeline, where the agreement will first be scrutinised by the state-owned Vizhinjam International Seaport Limited and then the law department.
An empowered committee headed by the chief secretary will scrutinise the proposal before forwarding it to the cabinet for final decision.
‘Proposed investment will be a major boost for Kerala’
“Once the request for approval is received, the government will examine whether it complies with the terms of the concession agreement. After weighing the pros and cons of the investment, the proposal is expected to sail through,” a senior official said.
Technically, MSC’s proposed acquisition of a 49% stake in AVPPL is in line with the concession agreement, which permits foreign investment of up to 74% at this stage. However, the chief minister said the government’s final decision on the share transfer will be guided by five key considerations: national security, protection of public interest through a common-user facility, fair competition, equal opportunity for all companies, and the long-term growth of Vizhinjam Port, including off-port development and its impact on state revenue.
Officials indicated the state is unlikely to overlook the economic gains from such a massive capital infusion into a region that has traditionally struggled to attract FDI. “The government has the power to intervene if there are complaints of monopolistic practices. Under Clause 5.8 of the original concession agreement, such intervention is possible after December 3, 2027,” an official said, adding that the port remains fully owned by the government and the investment is only in the operating company.
An outright rejection of the share transfer could hurt the state’s investment credibility, while approval could accelerate the port-led economy and strengthen state revenues. Industry experts say Kerala should use the opportunity to redefine its image as an investor-friendly destination.
Former Union shipping secretary K Mohandas strongly backed the proposed investment, saying it would be a major boost for Kerala. “A company operating in Kerala is attracting such a large investment. It will help fully implement the project, including all the planned expansion. More importantly, it sends a strong message that Kerala is a place where investors can confidently invest,” he said.
Adani Group officials described the induction of a global shipping giant as a strategic move to secure the project’s completion and future expansion. They said APSEZ, being a publicly listed company, was required to inform market regulator SEBI first. The state government, they added, was formally notified immediately after SEBI made the proposed stake sale public.