Adani group benefits with 33 percent profit from Kerala’s Vizhijam international seaport project says CAG report

Adani group benefits from Kerala's Vizhijam international seaport project says CAG report

THIRUVANANTHAPURAM,May23: The Comptroller and Auditor General (CAG) has termed the agreement between the state government and Adani group ,for setting up Vizhinjam International Seaport project as one sided, with a substantial advantage to the Adani group.

Kerala government which had incurred 67 % of the total project expenditure of Rs 7,525 crore will be drawing a profit of mere Rs 13,948 crore. Meanwhile, the Adani Group which shares 33 % of the project expenditure will reap a profit of Rs 1, 44, 653 crore, the report pointed out. While the state government will spend Rs 5,071 crore, Adani will spend only Rs 2,454 crore for the project

 “The Kerala government had had not been able to draw up a PPP policy clearly defining the objectives and due processes with the result that a major project languished at the drawing board stage leading to diminished financial viability.
The technical and financial estimates prepared by external consultants were not scrutinised with due diligence resulting in inflation of cost estimates. The interest of the Kerala Government was not protected adequately while drawing up the concession agreement. Irregularities and lack of economy were noticed in the expenditure incurred for the project,” the report said.
Meanwhile, Vizhinjam Seaport Limited CEO Jayakumar said the CAG report was only a draft one and many of the queries raised by the CAG were answred by the government.
The deal for the Vizhinjam International Seaport project is against the best interests of the state and only the Adani Group is set to benefit from the transaction.

Vizhinjam International Multi-purpose Deepwater Seaport, the much-hyped international trans-shipment terminal project in Kerala capital, is against the best interests of the state, a draft report of Comptroller and Auditor General (CAG) has pointed out. Adani Group, which is building the seaport on a build, operate and transfer (BOT) basis, is the only beneficiary of the project, the auditor said.

The draft report prepared by Amar Patel, the Principal Account General (Audit), in July, was sent out to Vizhinjam Seaport Limited seeking clarification.

“CAG has asked for clarification about the project. The final report will be released after considering our explanation. The CAG will also examine the clarification given by state government before preparing the final report. The preliminary draft is not of much significance,” Vizhinjam Seaport Limited CEO Jayakumar said.

The state is investing 67%, amounting to Rs 5, 071 crores, of the project cost while Adani Group will invest Rs 2, 454 crores. The state is eligible to get Rs 13, 948 crores as income from the port in the agreement period of 40 years while Adani Group will walk away with a major portion on of the  Rs 1,32, 705 crores, the report pointed out.

It is also mentioned that wasteful expenditure and irregularities were noticed in project implementation.  Congress-led United Democratic Front government failed to give satisfactory explanations to some of the doubts raised by CAG prior to the preparation of draft audit.

The report prepared by the principal account general (Audit) Amar Patel is learned to be almost final. However, the report is not likely to be tabled in the state assembly during the ongoing session. According to sources, the report with minor modifications may be tabled in the assembly in December.
In August 2015, Kerala government signed an agreement with Gautam Adani’s  Adani Ports and Special Economic Zone (APSEZ) to build the trans-shipment terminal and to operate it for 60 years.
 Meanwhile, ports minister Kadannappally Ramachandran said that he had not seen the report but said the government was committed to go ahead with the project.