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Vizhinjam: The port that almost wasn’t built
- After a wait of three decades, the container transshipment port is nearly ready
Thiruvananthapuram: Zhen Hua 15, a ship twice the length of a football field, made history last week when it docked at the Vizhinjam International Deepwater Multipurpose Seaport in Kerala after sailing down the East China Sea with a cargo of cranes for the port. For the Zhen Hua 15, it was just a 42-day journey, but for India’s newest mega port, the arrival of the Chinese ship marked the end of a three-decade-long wait.
The port, which is fully owned by the Kerala government, is being built by Adani Vizhinjam Ports Pvt. Ltd, a subsidiary of Adani Ports and SEZ Ltd (APSEZ), India’s largest private sector port operator. It is expected to be fully operational by December 2024, and will be able to handle 18,000 twenty-foot equivalent units (TEUs) of containerized cargo, which will eventually be expanded to 3 million TEUs.
The port is a dream project for the government and the private sector. It is the first to come up on Kerala’s shores in 96 years, and is expected to boost commerce as well as tourism. For the central government, it is a big move to grab a large share of the lucrative transshipment market, and save on precious foreign exchange.
A container transshipment port allows smaller feeder vessels to transfer cargo onto larger ships for delivery to final destinations. Shipping lines save money with larger vessels, as freight prices are lower for exporters and importers. Currently, due to depth limits, feeder ports in India cannot accommodate larger cargo ships.
The port is also crucial to Adani Ports’ goal of becoming the world’s largest port operator by 2030. It is the “toughest challenge” the company has undertaken so far, Karan Adani, the chief executive officer of APSEZ, told Mint on Sunday. Vizhinjam is strategically important for Adani Ports to gain a foothold in offering integrated supply chain solutions to shipping lines, he added, noting that the company is planning to invest ₹20,000 crore in the project by 2030.
Rajesh Jha, managing director and chief executive of Adani Vizhinjam Port Pvt. Ltd, said the project has already received ₹7,700 crore in investments in phase one, with the company putting in ₹2,500-3,000 crore and the rest coming from the state and central governments, including as viability gap funding.
First of its kind
Located near the southernmost tip of the country in Kerala’s capital Thiruvananthapuram, Vizhinjam is currently just a flat expanse of land jutting into the ocean with a backyard dotted with narrow alleyways, low-roofed houses, tall coconut trees, and a fishing hamlet. Within a few years though, it will be the site of glass skyscrapers, a busy financial hub, hotels, and even a new highway and a railway line.
Vizhinjam is India’s first and only transshipment port of its kind, said Jayakumar, chief executive officer and director of Vizhinjam International Seaport Ltd, a special purpose vehicle floated by the Kerala government to facilitate implementation of the project. It is the only port with a natural depth of more than 20 metres, which is critical for large vessels, he said. Other ports have far less depth, and even that is achieved through dredging, which is expensive, he added. Knowledge about the unusual depth of Vizhinjam’s waters dates back almost a century.
Further, the Vizhinjam port is only 12 nautical miles from the international shipping route, which is closer than many domestic and international ports, allowing ships to dock more quickly without diverging too much from their itinerary. This is a key parameter, and gives the central government a strategic advantage in the port, said Jayakumar. International shipping routes account for 30% of worldwide freight traffic.
Indian ports suffer from a woeful lack of capacity. In 2020, India’s container volume stood at 17 million TEUs, against China’s 245 million, according to Maritime India Vision 2030, a blueprint developed for the marine economy by the Indian government. Vizhinjam is perfect for some of the world’s largest ships since it has a natural waterway that can be expanded to 24 metres below the sea. Such ships have avoided India until today, docking instead in Colombo, Dubai, and Singapore, said Jayakumar.
Catering to large ships will be crucial in drastically reducing India’s dependency on foreign transshipment hubs and boosting forex reserves, said Adani. “The size of vessels is increasing on international trade routes. In the next 10 years, the average size of ships will be around 12,000-15,000 TEUs against the current 6,000-8,000 TEUs. Vizhinjam can handle 20,000 TEU ships with better depth,” Adani said.
The origin
Despite its hallowed status today, it was a project that almost never saw the light of day. For three decades, successive state governments unsuccessfully tried to find someone to build it. At one point, even the Navy was asked to build it.
According to a retired IAS officer who didn’t want to be identified, it took a letter from K.M. Chandrasekhar, a former cabinet secretary and Keralite, to Montek Singh Ahluwalia, then the deputy chairman of the erstwhile Planning Commission, in 2014, for new life to be breathed into the project. Ahluwalia’s infrastructure advisor Gajendra Haldea, renowned for his contributions to several big-ticket infrastructure projects, and known in some circles as the father of public private partnership (PPP) infra projects, took an interest.
After a thorough analysis, it was concluded that the project could only be done in PPP mode, said the retired civil servant. But in order for it to be viable, a private bidder would have to spend a lot of money building it, without any assurance of enough cargo to break even in the short term. The solution proposed was for the federal and state governments to offer sops—especially viability gap funding, something never given to a port project back then.
Ultimately, a meeting between former Kerala chief minister Oommen Chandy and Union finance minister Arun Jaitley in 2014 cemented the project and it quickly got approval for ₹810 crore in viability gap funding, the retired IAS officer claimed.
Even so, three rounds of bidding for the project went without any takers, until the entry of the Adani Group at the last minute. Shashi Tharoor, the Congress party’s Lok Sabha member from Thiruvananthapuram, claimed on Sunday that consultations with the Adanis began in 2015, when he met the billionaire industrialist and group owner Gautam Adani by coincidence on a flight abroad and convinced him to join the bidding.
Eventually, a concession agreement was drawn up for 40 years between Kerala government and Adani Vizhinjam Ports.
Toughest project
Adani’s engineers and staffers, speaking on condition of anonymity because they are not authorized to speak to the media, said the port was their toughest project. Vizhinjam’s biggest advantage is its depth. But there was one problem—it lay one kilometre away from the shore. Designing and building a breakwater hence became the biggest difficulty before Jha, who helped build the Kalinganagar steel plant for the Tata Group, an aluminium project for the Birla Group, and a super-thermal project for the Adani Group.
A breakwater is a physical barrier built in the sea to create tranquil conditions inside its basin. Such conditions are needed for a ship to berth, for the smooth loading and unloading of cargo. After long discussions, the engineers arrived at an L-shaped design that jutted into the waters for about a kilometre. Building it would be no mean task.
“It is like building a 10-storey building inside water. Only one or two floors will be above water,” said one of the main engineers who worked on the project. “If you take its cross-section, it will be like a 3.1-km-long pyramid, with depth ranging from 13 to 20 metres,” the person added. “It was an engineer’s nightmare.”
There was another difficulty, said another executive: the project would require around 8 million tonnes of stone, only a fraction of which was locally available. The stones had to come in specific shapes and sizes, some weighing 1-6 tonnes, which would have to be quarried.
The company ideally needed 10,000 stones per day but was only able to secure 5,000. It applied for passes to run 18 quarries until 2021, but had only been granted access to three. The state government was supportive but red tape was a big stumbling block, the executive quoted above said.
Since the construction was in the sea, they were also slaves to the vagaries of the sea. They had only a seven-month window to construct in a year. No work would be possible during the other months, because of Kerala’s heavy monsoon. In 2017, during Cyclone Ockhi, which killed 365 people, both approach roads to the port were cut off and damaged as was a platform. A specialized dredger was also lost to the sea. Then came the Kerala floods of 2018, which killed about 483 people, and had an intensity unmatched by any floods in the last 100 years. The port had lost 250 non-working days at this point, said the executive from the Adani company.
“Every day’s delay was costing us around ₹1.5 crore to service debt. And the longer it took to build, the longer it would take to break even on the project. We were bleeding on both sides,” the person said.
And then there were the local upheavals and environmental concerns. The port, even today, is a polarizing topic in Vizhinjam. Thiruvananthapuram officially accounts for one-third of the state’s total small-scale fisheries and many of them are at Vizhinjam. The port construction was blamed by the local population for huge sea erosion on its northern side, and heavy sand accretion on the southern side. The site’s neighbourhood also witnessed increased turbulence, affecting the lives and livelihood of the fishing community.
Meanwhile, a case in the National Green Tribunal (NGT) challenged the project, citing technical reasons to ban any port activities. Even as the case went in favour of the port in 2015, the NGT instituted a panel of experts to monitor the port for potential environmental damages every six months.
The panel has come out with four reports so far and admits that there is erosion on the northern side and accretion on the southern side, said Joseph Vijayan, a local environmental activist who filed the case. But, he said, the panel has blamed this on climatic events such as cyclones rather than the port construction. It goes against the premise on which legal validity was obtained for the port, said Vijayan.
“If Trivandrum (Thiruvananthapuram’s erstwhile name, still preferred by the locals) has one of the most eroding coasts in the country, how can you have a port?” he asked.
From competing with international shipping lines to handling local protests, the port’s future still hangs in the balance. But after three decades, it is a dream that has finally become a reality, overcoming numerous challenges along the way. Perhaps the fact that the first ship to enter its waters carried a cargo from China, at a time when relations between the two countries are not at their warmest, is an indication that Vizhinjam will always find a way forward, despite the numerous challenges that lie ahead.
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Business NewsNewsVizhinjam: The port that almost wasn’t built
First Published:18 Oct 2023, 09:11 PM IST
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