With the Kerala government intent on extracting damages from the Adani Group for not meeting the Vizhinjam Port deadline, the Group has decided to invoke the 'force majeure' clause to shield it from penalties.
“Force majeure' (French for 'superior force') is a legal provision that excuses a party from contractual violations if these failings had happened as a result of unpredictable events beyond its control, events that no amount of due diligence or good industry practices could have prevented.
The Adani Group has come up with two such 'force majeure' events. One, the Ockhi Cyclone that ravaged the southern Kerala coast in late 2017. Two, the December 2018 order of the National Green Tribunal quashing the power of the District Expert Appraisal Committees (DEACs) to grant environmental clearances.
A top source in Adani Vizhinjam Port Limited (AVPL) told Onmanorama that these two events had slowed down the first-phase work of Vizhinjam International Deepwater Multipurpose Seaport. “Ockhi washed away most of the work we had done. There were damages to berths and reclaimed land was washed away. A part of the breakwater was also swept away,” the AVPL source said.
Then there was the shortage of rocks for the breakwater, caused by the BGT order in December. According to the AVPL, the order put a sudden stop to the supply of rocks for the breakwater construction. “The entire process of getting clearances for mines had to begin anew,” the AVPL official said. The AVPL has applied for 21 mines in Kerala, in Thiruvananthapuram, Kollam and Pathanamthitta.
“We were about to get clearance for one in Kollam when the NGT order came as a bolt from the blue. After the DEAC's emasculation, we had to get clearance from the State Expert Appraisal Committee, and this was time consuming. The Kollam mine that should have been operational by December 2018 started functioning only in June 2019. The environment clearances of other mines, too, has therefore got delayed,” the source said.
The AVPL, in short, argues that it cannot be blamed for the shortage of rocks for the construction of the breakwater. The government sources, too, concede this point.
In the first phase of 1460 days, the AVPL was bound by contract to construct a 3.1-kilometre breakwater, a two-kilometre approach road, an 800-metre jetty, fishing harbour, and also had to reclaim 53 hectares of sea. The deadline ended on December 3, 2019.
The breakwater, an off-shore wall of rocks that protects the port from the waves, is not even half complete. The jetty, where the ships anchor, is only about 60 per cent complete. The dredging work is virtually at a standstill because the breakwater construction has not progressed. Dredging is near impossible without the cover of the breakwater that keeps the crashing waves at bay.
Kerala government sources said the AVPL has been given 120 days grace time, called 'Cure Period' in legal parlance, to complete the first phase. Once the 'Cure Period' is over, the government can appropriate 0.1 per cent or Rs 12 lakh daily from the Rs 120 crore the AVPL had kept as 'performance security' till the work is completed.
The 'Cure Period' of 120 days is clearly not enough. The AVPL, invoking the 'force majeure' clause, has asked for an extension of 16 months. “In fact, we had been asking for an extension from early 2018, right after we took stock of the Ockhi damages. The source also claimed that the first ship could be berthed at the port by December 2020.
According to the AVPL top source, 80 per cent of the work is already complete. “The construction of the port operations building, the electric switchyard or the sub-station and the main gate is at an advanced stage,” the AVPL official said.
The AVPL is even planning a phased inauguration of the project. The operations building will be inaugurated in April 2010, the substation three months later in July. “By October 2020 the main gate will be inaugurated,” the official said.
The plan is also to improve the availability of rocks by the middle of 2020. “We have put in place measures to transport up to 15,000 metric tonnes of rock daily to the site to expedite the work on the breakwater,” the official said.
Besides the 21 operational mines in Kerala, the AVPL also plans to bring in rocks from Tamil Nadu using the sea route, in barges. “Over 70 per cent of the breakwater can be completed by December 2020 and that would be enough to pull in a ship,” he added.
The contract for the construction was signed in August 2015 and the work started on December 5, 2015. The AVPL was given 1,460 days, till December 3, 2019, to complete the first phase.
