Thiruvananthapuram: Amid mounting political scrutiny over Adani Ports and Special Economic Zone's (APSEZ) proposed sale of a 49 per cent stake in Adani Vizhinjam Port Private Limited (AVPPL) to Switzerland-based Mediterranean Shipping Company (MSC), the company on Wednesday formally sought the Kerala government's approval for the transaction. The request came as the state government maintained that no change in ownership of the Vizhinjam port concessionaire could take place without its prior consent.

The proposal, announced by APSEZ on Tuesday, would see MSC acquire a 49 per cent stake in AVPPL for about USD 1.4 billion. The deal values the project at USD 2.85 billion, which APSEZ has described as the largest foreign private investment in Indian port infrastructure.

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Adani formally communicated the proposal to the state government on Wednesday, citing provisions in the concession agreement governing the port and seeking approval for the transfer. The move followed political controversy over the proposed transaction.

Government says proposal will undergo detailed scrutiny

Replying to a special submission by Leader of the Opposition Pinarayi Vijayan in the Kerala Assembly, Chief Minister V D Satheesan said the government would examine the proposal thoroughly before taking a decision.

Quoting Clause 5.3 of the concession agreement, Satheesan said the concessionaire cannot undertake or permit any change in ownership without the prior approval of the Authority, which in this case is the Government of Kerala.

He said the Companies Act treats the transfer of more than 25 per cent equity as a change in ownership. Since the proposed transaction involves a 49 per cent stake, the state's approval is mandatory.

The chief minister said the proposal would be examined on five parameters: national security, public interest, fair competition, investment and the port's long-term development.

He added that approvals from the Union Ministry of Ports, Shipping and Waterways and the Union Ministry of Home Affairs would also be required because Vizhinjam is a strategically important port.

State seeks safeguards against monopoly

Satheesan said the government would ensure that Vizhinjam continues to function as a common user facility and remains accessible on a non-discriminatory basis to all shipping lines, vessel operators, exporters, importers, freight forwarders and other stakeholders.

"The most important issue we must pay attention to is that there should be a common user facility," he said, adding that no company should be allowed to establish a monopoly over the port's operations.

He noted that MSC was not merely a financial investor but one of the world's largest container shipping companies as well as a major container terminal operator.

"Therefore, we must carefully examine how they intend to use this facility," he said.

Opposition flags security and competition concerns

Leader of the Opposition Pinarayi Vijayan welcomed the chief minister's clarification that no approval had yet been granted, but urged the government to scrutinise the proposal carefully.

He said the concession agreement required the proposal to be assessed from the perspective of national security and the wider public interest.

Referring to the Union government's treatment of Vizhinjam as critical infrastructure during the Pahalgam attack and Operation Sindoor, Vijayan said security considerations could not be ignored.

He also questioned the commercial implications of allowing one of the world's largest shipping companies to become a joint owner of the port's concessionaire.

"If that shipping company also becomes a joint owner with the concessionaire, which is the port operator, then a new form of monopoly will be established here," Vijayan said.

He argued that such an arrangement could allow a single company to dominate shipping services through the port, influence freight rates, discourage investment by competing logistics firms and affect port-based industries. He also expressed concern over the possible impact on Kerala's long-term revenue interests, as the state holds a stake in the project.

APSEZ has said its partnership with MSC would strengthen Vizhinjam's position as a major transshipment hub in the Indian Ocean.