Over a month after Adani Ports and Special Economic Zone (APSEZ) announced it had signed a "definitive agreement" to sell a stake in the Vizhinjam Port to a Mediterranean Shipping Company (MSC) subsidiary, the shipping ministry has issued an important update about the deal.
Union Minister for Ports, Shipping and Waterways (MoPSW), Sarbananda Sonowal, told the Lok Sabha on Friday that the Centre had not yet received Adani Ports' proposal for the sale of a 49 per cent stake in the Thiruvananthapuram-based port to MSC arm Terminal Investment Limited (TiL).
Adani Ports holds a majority stake in Adani Vizhinjam Ports Private Limited (AVPPL), its subsidiary and the concessionaire for the state-owned port under the Public Private Partnership (PPP) mode. It will be this stake that will be divested, should the $1.4 billion deal with MSC go through.
The Centre is expected to make a number of decisions on the stake sale, especially on matters related to foreign investment and security, when it gets the proposal.
Notably, it is only after obtaining the Centre's approval—which follows state approvals—that a final Memorandum of Understanding (MoU) can be signed between APSEZ and TiL, which will clear the way for the divestment to occur.
"The Government of Kerala has informed that it has received a proposal from AVPPL for prior approval of the Concessioning Authority, i.e. the Government of Kerala, for transfer of 49 per cent equity in the company (AVPPL)," Sonowal added in his written reply to the Parliament on Friday.
What we know so far
Just days after Adani Ports announced the "definitive agreement" on June 30, the V.D. Satheesan-led Kerala government raised issues, saying that it had not been informed of the deal.
Noting that the state government had only learnt of the deal via reports, CM Satheesan had also flagged that any sale of more than 25 per cent stake in the port needed prior approvals, as it was state-owned, and APSEZ was only a concessionaire.
The Opposition had also raised its voice, alleging that a monopoly was being planned between Adani Ports and MSC, which happens to be one of Vizhinjam's top customers. It had also written to SEBI, urging it to intervene in the deal over alleged violations of the concession agreement.
When the Kerala government received the stake sale proposal, it was supposed to go to the Law Department for vetting, after which it was to be examined by a high-power committee headed by the Chief Secretary.
Based on the recommendations of this panel, the State Cabinet will decide whether to approve the stake sale or not, after which it will head to the Centre.
