The Karnataka government’s decision to import 1 lakh metric tonnes of natural sand from Malaysia during 2017-18 to address the acute scarcity of river sand has resurfaced as a significant issue. The Krishnapatnam Port Company (KPCL), now owned by the Adani Group, has issued legal notices to the government, demanding compensation of Rs 76 crore, including dues for uncleared stocks worth ₹10 crore.
The state government has responded by obtaining a stay order against the notice and is now planning to sell the unsold imported sand lying at KPCL through open bidding.
To address the severe shortage of river sand in 2017-18, the government imported 1,03,872 metric tonnes of sand from Malaysia through Mysore Sales International (MSIL) under the commerce and industries department. A consortium of three companies—KPCL, Poseidon FZE, and Dhanveer Port—handled the import, according to senior officials at MSIL. Another company, Oshine Agencies, was tasked with transporting the imported sand from the Andhra Pradesh port to Karnataka for retail sales.
However, the situation turned problematic. The Covid-19 pandemic disrupted demand, and the imported river sand was costlier than locally available manufactured sand (M-sand). “We could sell only 14,759 metric tonnes of sand during that time. While we invested Rs 14.5 crore to import the sand, we earned back only ₹4 crore from sales. We still need to recover Rs 10 crore by disposing of the remaining 89,113 metric tonnes of sand lying at KPCL,” said a senior MSIL official.
While the state government was exploring options to sell off the unsold sand, the Adani Group acquired KPCL, including its assets, in 2020-21. With no sign of MSIL clearing the imported sand or paying ground rent for its storage, the Adani Group issued legal notices to the state government.
“Initially, the Adani Group demanded ₹84 crore through a legal notice. We were surprised as the net worth of the unsold inventory was only ₹10 crore. Despite trying to contact other partners who were part of the agreement with MSIL, there was no response. We replied to the legal notice, and the Adani Group later revised the dues to ₹76 crore. We promptly approached the court and secured a stay against the notice,” explained another senior MSIL official.
Industries Minister MB Patil brought the issue to the attention of the chief minister, who also heads the finance department. Both the MSIL Board and the finance department advised immediate disposal of the unsold sand, irrespective of profit or loss.
Manipur Ethnic Violence: Kuki ‘Coffin’ Rally Remembers Victims
Senior marketing officials at MSIL revealed that some bidders have expressed interest in purchasing the imported sand, and they remain hopeful of clearing the inventory soon.
