In one of the largest Engineering, Procurement and Construction (EPC) contracts in India’s port sector, Adani Vizhinjam Port Pvt. Ltd. (AVPPL), a wholly owned subsidiary of Adani Ports and Special Economic Zone Ltd. (APSEZ), will award a $1.753 billion EPC contract to Adani Infra (India) Ltd. (AIIL) for the construction and development of Phase 2 of the Vizhinjam International Container Transhipment Port.
The fixed-price contract, equivalent to about ₹16,059 crore at the current exchange rate of ₹91.61 to a dollar, is being executed as a related-party transaction. APSEZ said the contract value has been determined on an arm’s length basis and reviewed by an independent external technical practitioner and consultant. The transaction has received approval from APSEZ’s audit committee and board and will be placed before shareholders for approval at an Extraordinary General Meeting scheduled for February 2.
Strategic rationale
APSEZ said the decision aligns with its long-term strategy of executing large-scale and technically complex infrastructure projects while maintaining market leadership in the ports and logistics sector. Given the scale and complexity of ongoing and upcoming projects, the company said it does not intend to rely solely on external EPC contractors.
Adani Infra (India) Ltd. was set up to provide in-house EPC and project management consultancy capabilities, including engineering, project specifications, logistics management, quality, safety and health management, and overall project monitoring. This approach, APSEZ said, helps optimise costs, generate synergy benefits, retain specialised talent within the group and strengthen long-term competitive advantage.
Phase 1 completed, Phase 2 to add scale
Phase 1 of the Vizhinjam port was completed with an investment of $876 million, based on an exchange rate of ₹85 to a dollar at the time commercial operations commenced in December 2024. The first phase has a handling capacity of 1.6 million TEUs, against a nameplate capacity of 1 million TEUs. The Phase 1 EPC contract was awarded in December 2017.
The upcoming Phase 2 development, with an estimated investment of $1.753 billion, will add 4.1 million TEUs of capacity—around 2.56 times that of Phase 1. APSEZ said Phase 2 will benefit significantly from shared infrastructure created in the first phase, including the initial breakwater, access roads, boundary wall, gate complex and container scanning facilities.
On the marine side, while Phase 1 required construction of about 3 km of breakwater, Phase 2 will need only an incremental 920 metres. However, as the extension will be farther into the sea, the marginal cost per metre will be higher. Dredging and land reclamation costs are also expected to rise as activities move further offshore.
Expanded scope and advanced automation
The scope of Phase 2 is substantially larger than that of the first phase. It includes 21 automated ship-to-shore cranes, 45 automated rail-mounted gantry cranes for yard operations, a dedicated rail handling yard—which was not part of Phase 1—and advanced electrical and automation systems.
APSEZ said that while Vizhinjam is already India’s most advanced and fully automated transhipment port, Phase 2 will incorporate updated automation technologies and equipment to ensure seamless and efficient operations.
Cost benchmarking
According to APSEZ, the Phase 2 capital expenditure translates to about $427 per tonne, compared with $547 per tonne for Phase 1. The company said the pricing was arrived at after adjusting for common infrastructure benefits, reduced marginal breakwater length, higher automation and technology costs, foreign exchange impact, increased equipment requirements for 2.5 times capacity, and inflation over the past eight years.
“This approach is consistent with typical EPC contracting methodology,” APSEZ said, adding that executing the project internally is in line with the group’s strategic preference for assured delivery of critical infrastructure.
Construction of Phase 2 is expected to take around three years, followed by testing and readiness activities lasting about 10 months. Payments for the project are estimated to continue until FY2030.
