Vizhinjam: New pact with Adani to ensure timely revenue for Kerala by 2034

Thiruvananthapuram: The Kerala Government and Adani Vizhinjam Port Private Limited have signed a supplementary concession agreement to ensure the state starts receiving a share of revenue from the Vizhinjam port by 2034. The port's revenue share, originally expected to begin in 2039 due to a five-year delay in operations, will now start much earlier, as confirmed by Minister V N Vasavan during a press conference.

The agreement also eliminates the state’s obligation to pay ₹30 crore in compensation, which arose because the government could not transfer land to Adani's port company on time under the original construction agreement.

Increased capacity and advanced operations
The current handling capacity of the port is 1 million containers per year. Once construction is completed in 2028, this capacity is expected to increase to 3 million containers, with automated systems further enhancing it to 4.5 million containers annually.

Reduced viability gap funding (VGF)
Under the original agreement, the state was required to provide ₹408.90 crore as VGF to Adani’s port company. However, this amount has now been revised to ₹365.10 crore. Out of this, only ₹189.90 crore needs to be paid immediately, with the remaining amount to be provided upon the completion of construction.

Development costs for future phases
The second, third and fourth phases of the port's development will require an estimated investment of ₹10,000 crore, which will be borne by the Adani Group. The state government can also utilise ₹175.2 crore from the revenue it receives in 2028 to pay Adani for any outstanding obligations.

Revenue projections
According to the feasibility study report, the total revenue from the port during the 40-year concession period is expected to be around ₹54,750 crore, with Kerala’s share amounting to approximately ₹6,800 crore. Following the completion of capacity enhancements in 2028, total revenue is projected to reach ₹2,15,000 crore.
This agreement ensures an earlier financial benefit for Kerala and strengthens the long-term prospects of the Vizhinjam port.