Posted on July 17, 2024
Billionaire Gautam Adani’s conglomerate is doubling investment to $2.4 billion in its new mega port in southern India as it seeks to expedite expansion plans, and lure some of the world’s largest ships.
“We want to invest 200 billion rupees ($2.4 billion) in Vizhinjam international transshipment terminal by 2028,” to ramp up capacity five-fold to 5 million twenty-foot equivalent units (TEUs), Karan Adani, managing director at Adani Ports and Special Economic Zone Ltd. said in an interview July 12 at the port in Kerala. The initial master plan envisaged increasing the capacity to 3 million TEUs, he added.
Karan, who is Gautam Adani’s elder son, said the company wants to execute the seaport’s expansion plan by 2028 instead of the original deadline of 2045, in a bid to grab a bigger share of the international maritime trade that’s currently dominated by China.
Vizhinjam terminal, near the southernmost tip of India, is close to the international sea routes and has some of the deepest shipping channels, allowing large ships to dock.
Bloomberg News had, earlier on July 12, written about Adani Ports’s plans to invest 100 billion rupees, citing people familiar with the internal discussions, but the numbers were recast due to the revised timeline. The additional 100 billion rupees will be used to build ship-fueling facilities, a terminal for luxury cruise lines and a 2-million-ton cement grinding unit, Karan Adani said.
The first-of-its-kind port in India saw the arrival of its maiden mother ship — a container vessel operated by A.P. Moller-Maersk A/S — on July 12. It is also wooing other large container lines such as MSC Mediterranean Shipping Co. and Hapag-Lloyd to call in at the port, according to people familiar with the developments who spoke on the condition of anonymity.
A Hapag-Lloyd spokesperson said the shipping line has no plans as of now to include the Vizhinjam terminal in service network. “We will monitor the development of Vizhinjam port and if it should support efficient operations and allow for closer customer proximity, we may consider it as future option,” the spokesperson said in an email.
Representatives of MSC Mediterranean Shipping did not immediately respond to emailed requests for comments.
San Fernando, the 300-meter-long container vessel operated by Maersk, called in to offload about 2,000 containers and for 400 container movements within the vessel, marking the debut of the port that is a joint project between Adani Ports and the Kerala state government.
Global Maritime Map
The Vizhinjam transshipment port that was inaugurated in October 2023 is an effort by the ports-to-power Adani Group to put India on the global maritime map. The world’s biggest container ships so far had been skipping India because the country’s harbors weren’t deep enough to handle the vessels, and docked instead at ports such as Colombo, Dubai and Singapore.
The fresh round of investment will also be used to increase the length of the existing berth at the port and extending the breakwater at the port, the people said. Breakwater is a rock barrier built out into the sea to protect a harbor from the force of waves.
The proximity to international shipping routes that account for 30% of global cargo traffic, and a natural channel that goes as much as 24 meters (79 feet) below the sea makes Vizhinjam an ideal hub for some of the biggest ships to call in.
Adani Ports is speeding up the project as the lack of a dedicated transshipment port in India meant that despite its rising sea trade, about 75% of India’s transshipped cargo was being handled by ports overseas.
Vizhinjam is expected to facilitate the movement of transshipment traffic into India as well as on the major routes connecting the country, such as traffic between the U.S., Europe Africa and East Asia.
Adani Ports has an annual free cash flow of 100 billion rupees, and hence the entire 200-billion-rupee investment can be funded through internal accruals, Karan Adani said.
