Vizhinjam port: Unnecessary fight with Centre in the name of funds; VGF system similar to Vizhinjam existing in Thoothukudi

THIRUVANANTHAPURAM: Kerala is blaming the Centre regarding the sanctioning of the viability gap fund (VGF) of Rs 817.8 crore for Vizhinjam port, by pointing out the situation of Thoothukudi port, without knowing the facts.

The Kerala state government was saying that the VGF the Centre had allotted to Thoothukudi was not to be repaid. However, that's not the truth. In Thoothukudi, similar to Vizhinjam, one per cent of the revenue from the 11th year after commissioning should be shared with the Centre by the private company which operates the terminal. In Vizhinjam, that one per cent is shared with the state. It will increase by one percent each year. This can reach up to a maximum of 35 percent. From then, the payment should be made directly to the Centre. This is because the Thoothukudi port is completely under the control of the Central Port Trust, like the Cochin Port.

The Centre will allocate Rs 1411.19 crore as VGF in Thoothukudi. The Centre is providing VGF for a Rs 7,055.95-crore project to build an Outer Harbor container terminal and deepen the Pulimuttu (Groyne). The container terminal comes with private participation in the design, build, finance, operation and transfer model. They only have the management of it. Construction of the terminal has not started.

Investing 20%, hence 20% of revenue

It was agreed 10 years ago that the Centre and the state will have to pay 20% each of the project cost of Rs 4,089 crore as VGF. The Centre and state should provide Rs 817.8 crore each. The Centre had said that 20% of the revenue received by the state government from the port should be paid to them as the Centre is investing 20% of the amount. The condition is that the revenue sharing should continue till the amount received as central assistance is paid in full. This was stated in a letter sent by the PPPA cell of the Finance Ministry to the Principal Secretary of Ports in February 2015. The VGF has to be given to Adani after commissioning.

Consensus required

Instead of arguing with the Centre over VGF, Kerala should try to get help through talks. Central cooperation is essential to fully utilize the potential of the port.