vizhinjam-

THIRUVANANTHAPURAM: The Cabinet meeting held today decided to avoid the dispute with the Adani Group over the delay in completing the construction of Vizhinjam International Port and speed up the start of operations.

This will ensure that the port's profit sharing starts at the pre-determined time and central assistance is received on time. Big development projects based on Vizhinjam have been included in the budget. This is also to prevent that from getting obstructed.

The decision to settle the dispute with the Adani Group is on terms favourable to the public interest of the state. The Chief Secretary has been appointed for this purpose. According to the terms of the construction contract, Adani Group was supposed to complete the construction by December 3, 2019. However, it did not happen due to various reasons. Adani Group demanded an extension of time, but after the government refused, it moved for arbitration.

The government has decided to settle the dispute with conditions considering that proceeding with the arbitration will lead the project to endless litigation, causing a huge delay in completion and loss of the Viability Gap Fund from the Centre. A tripartite agreement will be signed to access the Viability Gap Fund of Rs 817.80 crore sanctioned by the Centre if Adani Group agrees to the terms of withdrawal of arbitration proceedings.

Conditions proposed by Govt

  1. The delay in completion of the project will be waived as per the terms of the agreement and extended by five years subject to conditions. The new date is 3 December 2024.
  2. According to the agreement, the second and third phases of the project are to be completed by 2045. These phases where Adani Group will invest Rs 10,000 crore are to be completed by 2028.
  3. 219 crore payable by the government to Adani Group as a commitment fee during the five-year extension period will be withheld from the equity support while giving the extension. 175.2 crore amounting to four years will be returned when the second and third phases are completed in 2028. 43.8 crores amount for one year will be received by the government.
  4. Revenue sharing will start in 2034 itself as per the agreement.