By P. Sreekumaran
THIRUVANANTHAPURAM: The controversy over the proposed transfer of a 49% stake of the Adani Vizhinjam Port Private Limited (AVPPL) has deepened with the Opposition deciding to challenge it legally and politically.
Announcing the decision, leader of the Opposition (LoP) Pinarayi Vijayan said the transfer of the stake of the company to Meditterranean Shipping Company (MSC) violated the concession agreement, which mandated prior approval from the State Government before any transfer of shares, Pinarayi said. Significantly, Chief Minister V. D. Satheesan had informed the Assembly that he had received no application seeking such approval.
Pinarayi further alleged that Adani group informed the market regulator Securities and Exchange Board of India (SEBI) about the share transfer without getting the State Government’s prior approval. This has rendered the transfer legally untenable.
The LoP said the Chief Minister was directly responsible for ensuring compliance with the agreement. The Government should have pulled up the Adani group instead of merely informing the SEBI that the proposed transfer lacks the mandatory approval.
Vijayan said the reluctance to intervene reinforces suspicions that the Government was acting against the interests of the State by favouring the Adani Group. He also sounded a note of waning that allowing MSC to acquire substantial stake could alter the ownership structure of the port and eventually create a monopoly. The LoP also made it clear that he was not against MSC but was only opposing the manner in which the ownership change was being pursued.
Meanwhile, the AVPPL has written to the State Government seeking to clarify its position on the transfer of the stakes. But the company has not cared to provide a copy of the agreement it has signed with MSC!
Through the agreement, the Government has granted mortgage rights over the port site and its assets to AVPPL for the concession period. But it is not clear whether the new partner, MSC, will also enjoy the mortgage rights granted to the AVPPL.
The State Government has constituted a new committee of experts to study the deal and assess its ramifications from the State’s perspective.
The AVPPL’s letter has sought to assure the Government that the MSC would not, under any circumstances, enjoy monopoly of the port. The port would, AVPPL said, continue to function as a common-user facility, accessible to all users without any discrimination.
But the ‘assurance’ has failed to allay the fears that the agreement will give the MSC an undue advantage by allowing it to appoint its subsidiaries to handle seaside and landside logistics, which could potentially lead to the dominance of a shipping line at the port.
The agreement stipulates that the concessionaire shall not undertake or permit change in ownership without the prior approval of the State Government. The Adani group has violated this by unilaterally deciding to transfer 49% stakes to MSC.
The State Government should have decided to challenge it legally. It has done nothing of the kind. And that strengthens the suspicion that there is foul play.
Another development which creates suspicions is the abrupt removal of Divya S. Iyer from the post of Managing Director of the Vizhinjam international seaport. This was clearly aimed at benefiting the Adani Group as Divya had refused to take any steps to favourite. Incidentally, the Group had mounted pressure on the previous Left Democratic Front(LDF) Government also to remove Divya. But the Pinarayi-led LDF Government had flatly refused to oblige the group. You handle the affairs of the port. It is our job to handle the officers of the port. That was the blunt message conveyed to the Adanis by the LDF Government.
Incidentally, a few days before he became the Chief Minister Satheesan had met officials of the Adani Group in Mangaluru by travelling in a chartered flight. The cost incurred is said to be in the region of Rs 25 lakh! So far, Satheesan has not cared to answer the question as to who financed his trip to Mangaluru. The pro-Adani steps gathered momentum only after Divya was removed and a junior officer appointed in her place.
According to the announcement made by the Adani Group MSC will acquire 49% stake in the Vizhinjam Port company for $1.397billion(around Rs 13,220 crore).
As per Clause 5.3 of the concession agreement, it is clearly stated that the concessionaire shall not undertake or permit any change in ownership except with the prior approval of the Authority, which, in this case, is the State Government.
Also, as per the Companies Act, the change in ownership can only be implemented if more than 75% of the shares are transferred. However, under the agreement signed between the State Government and the Adani group, a change in ownership is deemed to occur if 25% or more of the shares are transferred.
By going ahead with the agreement, the Chief Minister has landed himself and his Government in a deep political hole, getting out of which is not at all easy. Satheesan finds himself totally isolated as opposition to the agreement is not only from the Opposition but also from within the Congress and the allies.
Ironically, the accord is at odds with the official stand of the Congress which is vehemently opposed to the Adanis acquiring a foothold in Kerala, government by a Congress government. The depth of the opposition from the Congress itself is clear from the sharp remark from AICC general secretary in charge of organisation K. C. Venugopal. Kerala, he reminded Satheesan, is governed by a Congress government and not one headed by the BJP whose blue-eyed boy is Adani. The remark is indicative of the resentment prevailing in the Congress over Satheesan’s unilateral decision-making style. Troubled days are ahead for VD Satheesan. (IPA Service)
