The proposed sale of a 49% stake in Vizhinjam International Seaport by Adani Ports and Special Economic Zone (APSEZ) to Mediterranean Shipping Company (MSC) has encountered a significant hurdle, as the Kerala government announced it would meticulously scrutinize the transaction.
State Demands Prior Approval for Ownership Change
Chief Minister V D Satheesan stated on Wednesday that no change in ownership of the strategically important Vizhinjam port can proceed without the state's explicit prior approval. His remarks came in response to a special submission in the Assembly, where he noted that the government learned about the deal through media reports, not formal communication from APSEZ.
APSEZ had announced on Tuesday that Switzerland-based MSC, a global shipping and logistics giant, would acquire a 49% stake in Adani Vizhinjam Port Private Limited (AVPPL), the port's concessionaire, for approximately $1.4 billion. APSEZ valued the overall transaction at $2.85 billion, touting it as the largest foreign private investment in Indian port infrastructure.
Satheesan emphasized that Clause 5.3 of the concession agreement explicitly states, "The concessionaire shall not undertake or permit any change in ownership without the prior approval of the Authority," clarifying that "The Authority is the Government of Kerala." He added that under the Companies Act, a transfer of more than 25% equity constitutes a change in ownership, thus requiring state consent.
Five Key Aspects Under Review
The Chief Minister outlined five critical parameters the state government will use to assess the proposal once it is formally presented:
- National Security: Given Vizhinjam's strategic location, its implications for national security will be paramount.
- Public Interest: Ensuring the deal serves the broader public good of Kerala.
- Fair Competition: Preventing the establishment of a monopoly within the port's operations.
- Investment: Evaluating the nature and long-term benefits of the proposed investment.
- Port's Long-Term Development: Assessing how the transaction aligns with the port's sustained growth and operational efficiency.
Satheesan also highlighted the necessity of approvals from the Union Ministry of Shipping and the Union Ministry of Home Affairs due to the port's strategic significance. He underscored the importance of Vizhinjam remaining a "common user facility," accessible on a non-discriminatory basis to all shipping lines, vessel operators, exporters, and other stakeholders.
Monopoly Concerns Raised by Opposition
Leader of the Opposition Pinarayi Vijayan echoed the government's call for careful scrutiny. He expressed concern that MSC, as both a major shipping line and a prospective part-owner, could create a monopoly, potentially distorting competition. This could lead to Kerala's exporters becoming overly reliant on a single company, influencing freight rates and impacting port-based industries and future logistics investments, he warned.
Congress MP Shashi Tharoor, while welcoming the investment, also called for due diligence. He stressed that a transaction of this scale for a strategic asset demands thorough review, not just applause. Tharoor reiterated the need for Vizhinjam to remain a "non-discriminatory, common-user port" offering fair access and tariffs to rival shipping lines, even with MSC's partial ownership.