Adani Group’s Vizhinjam port stake sale: Keralam Assembly records contradict State’s claim of being kept in the dark

Although the Keralam government had been maintaining that the Adani Group initiated its proposal to sell its stake in Adani Vizhinjam Port Private Limited (AVPPL) without informing it, Assembly records show that the company had informed the State in advance of its plan to divest a 49% stake in the port company. Replying to an unstarred question in the Assembly recently, Chief Minister V. D. Satheesan himself revealed this.

Communist Party of India (Marxist) [CPI(M)] legislators G. Stephen, V. K. Sanoj, Xavier Chittilappilly and K. V. Sumesh had asked the Chief Minister, through an unstarred question, whether the Adani Group had made a move to sell its shares in the Vizhinjam port company without prior government approval. In reply to this question, the Chief Minister merely said ‘no’.

He further clarified that the AVPPL, the concessionaire for the development and operation of the Vizhinjam International Seaport, has submitted an application to transfer its existing 49% equity stake. This application has been submitted to the Government of Keralam (the concessioning authority) for prior approval, in accordance with the terms and conditions stipulated in the concession agreement. As per the provisions of the agreement, any change in ownership resulting from the transfer of shares in the concessionaire is subject to the prior approval of the concessioning authority. It is in accordance with this that AVPPL submitted an application to the government seeking prior approval for the proposed transfer of shares, the Chief Minister said.

The proposal for share transfer submitted by AVPPL, along with related information and other relevant matters falling within the scope of the concession agreement, is currently being examined by an Empowered Committee chaired by the Chief Secretary. Further action will be taken based on the recommendations and report submitted by this committee following a comprehensive review, he said in the reply.

However, the document did not mention anything about the timeline of the events that unfolded closely after the public disclosure made by the Adani Group.

The Adani Ports and Special Economic ​Zone (APSEZ) announced the Switzerland-based MSC Group’s decision to acquire a 49% stake in its Vizhinjam port ​for $1.4 billion on June 30, in what it ​said was the largest foreign private ⁠investment in domestic port infrastructure in India. This had stirred controversy in Keralam, as the contractual agreement mandates prior approval from the State government for the stake sale, although it does not specify when that approval must be obtained.

Soon after the announcement by the company, Mr. Satheesan, who oversees the Ports portfolio, informed the Assembly that the government was neither consulted nor notified prior to the finalisation of the transaction, while saying that he learnt about the developments through the media. The Chief Minister later publicly conveyed the government’s displeasure to the Adani Group, stressing the need for adherence to contractual obligations and transparency in such high-profile deals. Later, four days after the public disclosure and subsequent controversy, the Adani Group officially moved an application seeking the State’s consent for the stake sale.