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Adani's request to review penalty on Vizhinjam port on Kerala govt's radar

T E Narasimhan/ 11 Jun 18 | 09:55 PM

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The Government of Kerala has said it is analysing the request of Adani Group to review an earlier decision on imposing a penalty on the company for allegedly not complying with the project schedule according to the agreement. It has also said the government, through the Vizhinjam International Seaport Ltd (VISL), has wrote a letter to the Adani Group refusing its request for more time to complete the project, said Ramachandran Kadannappally, minister for ports, museums, archaeology and archives. Adani Group has earlier informed the government that the project could take 16 months more, owing to the damages caused by the Ockhi cyclone in November, 2017.

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According to the agreement between the government and the company, the Rs 75.25 billion project is scheduled to be completed by December 4, 2019. 

Adani’s spokesperson said the group was committed to expeditious completion of Vizhinjam port project and also added that it was a fact that Cyclone Ockhi did inflict a heavy damage to the dredgers and under construction civil work. Currently, this matter is under discussion with the Govt.

 The independent engineer of VISL has submitted a report, based on which work has been expedited by increasing the speed of reclamation works using higher efficiency dredgers.

However, the company said that the cyclone Ockhi occured on November 30, 2017 has damaged various equipment and construction activities in the Port and the construction works would take another upt to 16 months more.  

The Minister, responding to the qurry in the State Assembly of late, has said that VISL has written a letter to Adani Port refusing its request to extend the timelimit from the stipulated period mentioned in the agreement.

The company officials were not available for a comment immediately.

Besides, as per the concession agreement, 25 per cent of the project cost has to be spent on the 690th day, the second milestone of the project, which was on October 24, 2017. While Adani Port has said that it has spent around 35.8 per cent of the project cost, VISL's internal auditors has assessed that the investment was around 21.75 per cent, excluding some of the expenditures claimed by Adani Port as the cost of the project.  The government alleged that the company failed to keep the works on schedule as per the agreement and has claimed a penalty of Rs 189.6 million. 

"The Adani Company has sought the government to review this decision. We are analysing this," said the minister.

The Vizhinjam International Transhipment Deepwater Multipurpose Seaport by Government of Kerala is aimed and designed to cater container transhipment besides multi-purpose and break bulk cargo. The port is being currently developed in landlord model with a Public Private Partnership component on a design, build, finance, operate and transfer (DBFOT) basis. The private partner, Adani Vizhinjam Port Private limited has commenced the construction on December 5, 2015.  Though the concession agreement envisages a construction period of four years, initially the State government and the company had set an ambitious target of 1000 days to make the port commercially operational.

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