Kerala Government Objects to Adani-MSC Vizhinjam Port Stake Sale as Procedure Questioned
The proposed sale of a 49% stake in the Vizhinjam International Seaport by Adani Ports and Special Economic Zone Limited (APSEZ) to Switzerland-based Mediterranean Shipping Company (MSC) has sparked controversy, with the Kerala government formally expressing displeasure over being kept uninformed about the deal. An empowered committee headed by the state chief secretary is now reviewing the proposal.
The Vizhinjam port, developed under a public-private partnership (PPP) model, operates under a concession agreement signed in August 2015. As per the agreement, Adani Ports must retain at least 51% shareholding during construction and the first year of commercial operations, and at least 26% thereafter. Crucially, any transfer of shares requires prior approval from the state government.
Adani Group argues that the port is now in its second year of operations, allowing it to dilute up to 74% of its stake. The proposed dilution is 49%, and the process is expected to take three to six months. However, the Kerala government and opposition contend that the agreement mandates prior permission for any change in ownership, which was not sought before the preliminary understanding with MSC.
Opposition leader Pinarayi Vijayan raised concerns that the stake transfer could create a monopoly for MSC at the port, forcing exporters to rely on its vessels and freight rates. National security interests are also cited, given the port's critical infrastructure status.
Adani Ports maintains that the deal is subject to customary approvals, including stock exchange disclosures under SEBI regulations, state government approval, foreign direct investment (FDI) clearance from the central government, and Competition Commission of India approval. The company states that it has already made the required stock exchange disclosure and public announcement, but the state government's approval remains pending. The process is expected to conclude in three to six months.
