Bangalore: The Adani Group has asked Australia to frame a special law that prohibits activist groups from seeking judicial review of environmental approvals granted for its $15 billion coal mine, rail and port project in Queensland, as it seeks a lasting solution to controversy and delay, chairman Gautam Adani said.
Adani said the proposal was placed before the Australian government during an hour-long meeting with prime minister Malcolm Turnbull on 4 November. “Now it is enough. They cannot continue to challenge the project. They cannot go for judicial review all the time. In OECD countries, you are not given approvals with closed eyes."
OECD is short for Organisation for Economic Co-operation and Development, a club of rich nations of which Australia is a member.
In 2010, the Adani Group acquired the rights to develop the Carmichael coal mine in Galilee Basin of Queensland and a rail link with Abbot Point Port to ship the coal, but the project has been opposed by green groups.
“They are finding some technicality to seek review; that anyone can do. Some technical mistake here and there and they go to court. That will not help the larger interest," Adani said in an interview in Thiruvananthapuram on 5 December.
Adani said the project was “very important" from the point of view of both India and Australia. “It’s the world’s largest coal reserve which will support a minimum 100 million people to have electricity and light and for 100 years."
“Ultimately, a decision lies with the politicians. They have to go Parliament for enacting a special law which says that once government gives approval, no one can challenge it. That is what our request is to the Australian government. You come up with a special legislation which they have done in the past also."
“The challenge we are facing in Australia right now is on the one side government is giving all approvals and on the other side, environment activists groups are seeking judicial review and that derails the whole project."
“Even though there is no stay, because of the judicial review, no lender will finance the project. They do not know what will be the outcome," Adani stated.
The controversy has delayed the project by one and half years. “In the meanwhile, coal prices have also slumped. We have to revive to the next cycle," he said.
Adani, whose port operating unit Adani Ports and Special Economic zone Ltd (APSEZ) is India’s biggest company in the space, said the so-called landlord port concept is not a successful model for developing container transshipment ports such as the one being developed by his firm at Vizhinjam in Kerala.
A container transhipment port acts like a hub, into which smaller feeder vessels bring cargo which then gets loaded onto larger ships for transportation to final destinations. Larger vessels bring about economies of scale, and lower the cost of operations for shipping lines, which then translates into lower freight rates for exporters and importers.
The left parties, the main opposition in Kerala, boycotted the ground-breaking ceremony for the Rs5,552 crore project on Saturday.
The opposition political parties in Kerala have reservations on the structuring of the project. The left wants the landlord port concept to be followed for the Vizhinjam project, where the port will remain with the government and terminal operations are given to a private developer, Adani said.
This model was followed for the container transshipment terminal at Vallarpadam in Union government-owned Cochin port and has not been a success. At Vallarpadam, rates are set by a regulator and the operator has to share 33.30% from its annual revenue with the Cochin port during the 30-year contract.
Whereas, at Vizhinjam, APSEZ is free to set rates based on market forces because it is a port outside the control of the Union government.
The Kerala government will start collecting a revenue share from APSEZ only from the 16th year of operations, which will be equivalent to 1% of the gross revenue from the facility. The revenue share to be collected from APSEZ will rise by 1% every year till it reaches 40%.
The Vizhinjam port contract is for 40 years, which can be extended by another 20 years.
“If you really want to enter the transhipment business, you have to slash the price by half to compete with Colombo through which India sends and receives a big chunk of its container cargo. If you are paying 33.3% as revenue share to the government-owned Cochin port assuming a rate of ₹ 4,000 a container and suddenly you want to handle at ₹ 2,000 of which 33.3% has to be given to the government-owned port, what is left for the developer?" Adani asked. “That’s why Dubai’s DP World Ltd has not been successful at Vallarpadam. Whatever they say, the landlord port concept will never work for transshipment."
“At Mundra port (which is India’s biggest commercial port and the only one to handle 100 mt or more of cargo a year), we are landlord port as well as operator. We have freedom to do many things including setting rates. That’s why we are successful. Ultimately, our aim is to give a final solution to users," Adani said.