|Kerala Government's nod to Adani Ports for developing the Vizhinjam International Deepwater Seaport||Infrastructure & Energy||HSA Advocates
|03 June, 2015|
HSA Advocates acted as the legal advisor to the Government of Kerala and Vizhinjam Seaport International Limited (VISL) for selection of a private partner for implementing the Vizhinjam International Multi-Purpose Seaport project. The Project has been awarded to Adani Ports and Special Economic Zone Ltd. pursuant to a global competitive bid process.
The project is being developed under PPP model with viability gap funding from the Government of India and Government of Kerala. This project is of great importance not only to the State of Kerala, but also to the Government of India from national security perspective. The port is proposed at Vizhinjam, 16 kms away from Thiruvananthapuram, capital of the State of Kerala. The proposed port is just 10 nautical miles from the international shipping lane and is endowed with a natural seawater depth of up to 24 m and as close as one nautical mile from the seacoast. Due to this natural depth, Vizhinjam can attract the largest container vessels currently in operation and also the future mega container carriers.
Despite such significance of the project, the State Government had been struggling to award the project for more than a decade. Therefore, structuring the transaction required a very innovative thinking in order to ensure that the private developers find the project financially viable and at the same time, State Government’s interest is protected. A very significant element of the Project i.e. construction of breakwater required a huge investment and would have made the project unviable even with VGF. The Government, therefore, had initially decided to award it on EPC and the main port on PPP. However, considering the risks involved in splitting the project relating to accountability, delays, cost overrun etc. and pursuant to various consultations and discussions, the Government adopted a very innovative structure, which enabled inclusion of breakwater construction within the PPP project, where the Government will fund the cost of construction based pre-agreed lumpsum amount specified in the contract payable in staggered manner, however, all responsibility for such construction (delays, time overrun) is solely borne by the private partner.
HSA Advocates’ team, led by managing partner Hemant Sahai, and comprising of Anjan Dasgupta (Partner), Pranav Singh (Partner) and Sunei Kapur (Senior Associate), advised the State Government and VSIL for drafting of the concession agreement, preparation of the bid documents and assisting VISL in conducting the bidding process.
Hemant Sahai and his team are also representing VISL before the National Green Tribunal and the Supreme Court in relation to an application challenging the environmental and CRZ clearance granted to the project.
The high value deal was reported by all leading publication. The original text which appeared in the Financial Express on 16th July, 2015 is given below:
Gautam Adani-led Adani Ports and Special Economic Zone (APSEZ) on Wednesday said it has received Kerala government’s nod for developing the Rs 4,089-crore Vizhinjam International Deepwater Seaport project.
The Ahmedabad-headquartered group, which already operates the country’s busiest port at Mundra in Gujarat, has received “Letter of Award” for developing the port, Adani Group said in a statement.
The total project cost estimated by the Kerala government is Rs 4,089 crore and the time-frame for commissioning of project is 4 years which will be met by Adani Group based on its past execution record, it added.
“We are very happy to be a part of this prestigious project. We acknowledge the support of Kerala government to develop this deep water multi cargo port in the country. It is a strategic location being very close to international shipping route and has the potential to become the biggest trans-shipment hub in the region,” said Adani Group chairman Gautam Adani. He added: “This project makes us take one more step towards nation building, committing ourselves to the development of Kerala. This is indeed a very proud moment for us.”
The company said it had keenly participated in the tender to ensure that Kerala gets its first deep water multi cargo port and India gets its first deep water trans-shipment port which has been missing till date.
At present, about one million TEUs of Indian cargo is getting trans-shipped through foreign ports like Colombo. Development of Vizhinjam port will help in cost saving to Indian trade as the boxes can be trans-shipped at a lower cost from Vizhinjam port.
The proposed port at Vizhinjam is located in Kerala, 16 kms south of the state capital, Thiruvananthapuram. The port location is selected to tap the potential of development as a deep water international multi-cargo port. The proposed site is on the international shipping route connecting Europe, Persian Gulf and the Far East, very close to the east-west shipping axis within 10 nautical miles.
APSEZ also operates ports in Mundra, Hazira,Tuna-Tekra (Kandla) and Dahej, in Gujarat, Dhamra in Odisha and operates specialised coal handling facilities in Mormugao in Goa, Visakhapatnam in Andhra Pradesh. It is currently setting up a container terminal in Ennore in Tamil Nadu.
APSEZ is part of the Adani Group which is one of India’s leading business houses with revenue of over $10 billion.
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