High Court admits PIL on Gangavaram Port

Amaravati: Yet another decision of the State government ended in litigation causing concern to the government. This time around it is the Gangavaram Port Limited. The State government has recently decided to sell its stake to the Adani Group.

The government is selling its stake of 10.4 per cent to the Adanis' for Rs 644.78 crore.

A Public Interest Litigation (PIL) was filed by one Dr Satya Bhupal Reddy and one Bontha Purnachandra Reddy of the Prakasam district against the proposed sale.

The petitioners asked the High Court to order a comprehensive inquiry by Lok Ayukta into the deal with the Adani Group and direct the Comptroller and Auditor General (CAG) to conduct a propriety audit into the deal.

A division bench of the High Court comprising Chief Justice A K Goswami and justice N Jayasurya on Saturday took up the PIL questioning the modus operandi of 100 per cent acquisition by the Adani Group.

Arguing on behalf of the government, Advocate General Subrahmanyam Sriram said the decision to sell the stake was taken based on the recommendation of the high-power committee comprising senior officials. He said the government would make a detailed submission to the court soon.

Senior advocate G Venkateshwar Rao argued that the entire exercise was done in a secretive manner and the report of the high-power committee was not made public. The Bench posted the matter to September 20 for further hearing.

A couple of weeks ago, the Adani Ports and Special Economic Zone (APSEZ) of Adani Group informed the stock exchange that the Andhra Pradesh government had approved the proposal for sale of its stake to the tune of 10.4 per cent to it for a consideration of Rs 644.78 crore. The transaction is expected to be completed within one month.

The APSEZ already has 89.61 per cent stake in the Gangavaram Port, after it acquired a controlling stake of 58.1 per cent equity from its original promoter D V S Raju and his family on March 23 this year for Rs 3.604 crore.

Earlier in the same month, it acquired a 31.5 per cent stake from Warburg Pincus. If the Andhra Pradesh government offloads its stake of 10.4 per cent, the Adani Group would be holding 100 per cent equity in the Gangavaram port, which came into operation in July, 2009.

The move was also criticised by the Opposition which blamed the government for the financial mess it landed itself in and the means it was seeking to get out of it. The Andhra Pradesh Cabinet, led by YS Jagan Mohan Reddy, has approved the sale of the State government's 10.4 per cent stake in Gangavaram recently.

Former bureaucrat E A S Sarma too wrote a letter to the Chief Secretary stating "Gangavaram Port has been enjoying several concessions given to it in the past by the State government.

For example, the port had been granted exclusive economic zone rights over the sea front, much more than a public sector port like Visakhapatnam Port enjoys.

Combined with similar exclusive waterfront rights of Krishnapatnam Port, the Adani Group will not only enlarge its control over the east coast but also eliminate competition from the others.

From this point of view, it is highly imprudent for the State to have decided to sell away its strategic equity share in Gangavaram Port to the Adani Group."