The government of the state of Kerala, India, on Monday signed the concession agreement with Adani Group to build the Vizhinjam international container transhipment terminal on PPP model.

Chief minister Oommen Chandy, his Cabinet colleagues and Adani Ports and Special Economic Zone Limited chairman Gautam Adani were present when the agreement was signed by the state's department of ports' secretary James Varghese and Santosh Kumar Mahapatra of Adani Vizhinjam Port Private Limited.

Adani Ports and SEZ had been the only bidder for the project earlier in the year.

The port, which has a natural depth of 24 metres, is expected to be one of the largest ports in the world. It is envisaged to provide a total of 2000 m of quay length in three phases. The project involves the development of a container transshipment terminal with a capacity to load 600,000 twenty foot equivalent units (TEUs) a year initially, which can be scaled up to 1.8 million TEUs as per demand.

Once the three phases project is completed the port will add a total capacity of 5.3 million TEUs.

The project would be developed on a design, build, finance, operate and transfer (DBFOT) basis. It would have a contract period of 40 years which could be extended by another 20 years.

First phase of the project would cost about Rs75.25 billion (US$1,183 million).

Vizhinjam is a locality of Thiruvananthapuram city in the state of Kerala located on the Southern tip of the sub-continent. Vizhinjam is a natural port located close to the Persian Gulf-Malacca shipping lanes, an international ship route which carry almost a third of the world shipping traffic.

After signing the agreement, Adani said the construction activities would be inaugurated on November 1, which is observed as the formation day of the state. He said the first phase of the project would be completed within two years.