Kerala Govt Raises Concerns Over Adani's 49% Stake Sale in Vizhinjam Port to MSC

The Kerala government has objected to Adani Ports and SEZ Ltd's (APSEZ) plan to sell a 49% stake in the Vizhinjam port to a subsidiary of Switzerland-based MSC Group, the world's largest container shipping company. The state argues that the concession agreement requires its approval for any change in ownership.

On June 29, APSEZ entered into a share purchase agreement with Mundi Ltd, a subsidiary of Terminal Investment Ltd (TiL), which is the terminal operating arm of MSC. The deal, valued at $1.397 billion (approximately Rs 13,000 crore), would make MSC the largest foreign private investor in Indian port infrastructure if completed.

The Kerala government, led by the Congress party, stated that it was not informed about the transaction. Chief Minister V. D. Satheesan conveyed the state's displeasure to APSEZ, noting that the port was envisioned as a competitive global container transshipment hub with a level playing field for all stakeholders. The government fears that the deal could lead to a monopoly in shipping and container traffic for MSC.

The concession agreement, signed in August 2015 between the Kerala government and Adani Vizhinjam Port Pvt Ltd (AVPPL), mandates that the port be operated on a "common-user" basis, ensuring non-discriminatory access to all users. The agreement also stipulates that any change in ownership requires state approval.

Vizhinjam is India's first deep-water container transshipment port, developed under a public-private partnership model. The first phase was commissioned in December 2024, with an annual handling capacity of one million TEUs. The Kerala government invested Rs 5,595 crore in the first phase, while Adani contributed Rs 2,454 crore. The central government provided a viability gap fund of Rs 817 crore. The concession period is 40 years, extendable by 20 years.

Adani Ports has not commented publicly on the state's objections but has stated that the transaction is subject to regulatory approvals. The company has previously partnered with TiL in Mundra and Ennore ports, where TiL holds minority stakes. In those cases, the "common-user" model was maintained.

A state panel is currently examining the proposal. The opposition CPI(M) has also criticized the deal, aligning with the government's concerns. The outcome of the review will determine whether the stake sale proceeds or requires renegotiation.