Stake transfer to fund port development; MSC to operate only one terminal

THIRUVANANTHAPURAM: The transfer of a stake worth around Rs 13,000 crore to MSC (Mediterranean Shipping Company) will not give the global shipping giant control over all terminals at the Vizhinjam International Seaport, according to sources close to the Adani Group.

Sources said MSC will be given the operational rights to only one terminal. The port currently has two terminals, and a third will become operational after the next phase of development. Only one of these terminals will be operated exclusively by MSC, while the remaining terminals will continue to handle vessels from different shipping companies.

A similar arrangement exists at Mundra Port in Gujarat, where MSC operates only one of the port's five terminals. The Adani Group said the stake transfer follows legal provisions and will help complete the next phase of Vizhinjam Port's development by 2028.

Instead of raising funds through bank loans, the Adani Group has chosen to finance the port's expansion by selling a stake. The company was originally expected to invest Rs 2,454 crore in the first phase of construction but says it has already invested around Rs 6,000 crore.

For the remaining phases, Adani plans to invest another Rs 16,000 crore. Although the original master plan estimated the cost at Rs 9,800 crore, the company later announced additional investments. In total, Adani expects to invest nearly Rs 26,000 crore in the project.

According to the company, the stake sale to MSC will help raise funds equivalent to 49% of this total investment.

Under the agreement, 49% of the revenue generated by Adani from the port operations will be shared with MSC. MSC will also be responsible for bringing more shipping traffic to the port, making the partnership strategically important.

The Adani Group said the port's revenue system is fully automated, making it impossible to manipulate the government's share of the revenue. MSC already operates terminals at Mundra, Ennore, and Mumbai ports.

However, if the Kerala government decides to remove Adani from the Vizhinjam Port project by paying compensation, the company's stake sale agreement with MSC would become irrelevant.

The Adani Group also pointed out that DP World holds an 85% stake in the Vallarpadam container terminal.