Vizhinjam port fund: cannot repay Centre's share, says Kerala CM
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Thiruvananthapuram: In the matter of funding for the Vizhinjam seaport, Kerala Chief Minister Pinarayi Vijayan told Union Finance Minister Nirmala Sitharaman that the Centre must release its share of Rs 817.80 crore in the Viability Gap Funding (VGF) without imposing the condition that the state has to repay the amount later. In a letter to Sitharaman, he pointed out that the repayment would result in a huge loss of Rs 10,000 to 12,000 crore to the state exchequer, PTI reported.
Vijayan wrote, "The state is investing resources to the tune of Rs 5,595 crore out of the total project outlay of Rs 8,867 crore. I am sure the Hon'ble Minister would appreciate that, given the financial situation of a small state like Kerala with limited financial resources, this scale of investment involves tremendous sacrifice on the part of the state.
"In addition, as the repayment of Rs 817.80 crore is to be made on a Net Present Value (NPV) basis, this would involve a further loss of Rs 10,000 to 12,000 crore to the state exchequer in actual terms, computed on projected interest rates and revenue realisation from the port over the period of repayment," the CM said.
He further said that the VGF was a financial support mechanism that was introduced to encourage Public-Private Partnerships (PPPs) in infrastructure projects that are economically justified but not financially viable without additional financial support.
The VGF is invariably provided as a grant, not a loan, and its defining elements are that "the payment to the concessionaire is non-repayable, it is a one-time grant, and that it is over the construction period of the project," the CM said.
Vijayan pointed out that such a condition of VGF repayment was not imposed on the Outer Harbor project of VOC Tuticorin Port, which is "structured on similar lines as the Vizhinjam International Seaport".
"In the light of the facts outlined above, I request you to kindly accord the same treatment for Vizhinjam International Seaport," Vijayan's letter read.
It was the Empowered Committee constituted by the Department of Economic Affairs which imposed the condition that the VGF amount should be repaid by Kerala NPV terms by way of premium (revenue) sharing.