Vizhinjam sops for Adani illegal, says CAG

Thiruvananthapuram: The Comptroller and Auditor General (CAG)  has rapped the state government for the Vizhinjam port project and said that it is against the interests of the state. It has also accused the government of giving excessive benefits to Adani Group, the promoters.

The CAG in its report on the public sector undertakings for the year ended March 2016, pointed out that the decision to extend the concessionaire agreement for 10 more years would ensure an additional revenue of '29.27 crore for Adani. The concession period was earlier fixed at 30 years. However, later it was extended to another 10 years, which is illegal. The agreement also included a clause to give  an extension by 20 years, the CAG said.

The technical and financial estimates prepared by external consultants were not scrutinised with due diligence resulting in the inflation of cost estimates.  Due to this modification, the state government will have to pay an excess of '283.08 crore in advance resulting in interest loss of '123.71 crore, the report said.

Recently, Administr-ative Reforms Commission chairman V.S. Achuthanandan had also criticised the agreement and asked the state government to publish a white paper on it.

Former KPCC president V.M. Sudheeran  pointed out that the CAG finding that the project was against the interest of the state was serious. A detailed probe should be conducted on the issue, Mr Sudheeran said.

As per the agreement for the Rs 7,525-crore Vizhinjam port, 67 per cent of the project expense will be borne  by the state government, with Adani spending only 33 percent. The transshipment hub, on completion, would cater to the largest mother vessels with a capacity of 18,000 TEU.

Close on the heels of the report by the CAG, UDF leader Oommen Chandy said in the  Assembly  that the agreement with Adani Ports and SEZ Private Limited  can be probed by any one if there was dispute over it.

Mr Chandy claimed that the project became a reality due to the  sheer determination of the UDF government and challenged his detractors to examine the present agreement and the pact during the reign of V.S. Achuthanandan.

The government can decide which agreement is beneficial to the state, he said and added  that the CAG had  considered only the current situation and not the long-term benefits for the state.

As against the PPP model,  the previous LDF government under Mr Achuthanandan had proposed the landlord model.  Under it,  the construction of the port would be handled directly by the state government with funds for the project to be given through budget allocations and from a consortium of nationalised banks, while the port’s superstructure and operation would be the responsibility of a private player who would be selected through global tender.