Aug 09, 2012 at 02:40pm IST

Vizhinjam project: Kerala govt seeks relaxation in VGF norms

Thiruvananthapuram: The State Government is seeking relaxation in Viability Gap Funding (VGF) norms for making Central assistance possible for the multi-crore Vizhinjam international container transshipment terminal project. The state has urged the Centre to exempt it from two conditions for VGF. One, that the project should offer a service having pre-determined tariff, and, two, the VGF would be limited to 20 per cent of the project cost.

The government has made the request to Union Finance Minister P Chidambaram and Union Shipping Minister G K Vasan, Ports Minister K Babu said. The VGF comes in the form of grants and is a Central scheme for supporting infrastructure projects under PPP. The Centre will provide up to 20 per cent of the project cost as the VGF. The State Govt can add another 20 per cent to it. Another condition is that the project should be of a nature that provides services against payment of a pre-determined tariff.

The conditions make the Vizhinjam project ineligible for VGF. “The concession period for the Vizhinjam port is 30 years. A pre-determined tariff is not possible in a port,” said VISL CEO A S Suresh Babu. As per latest estimates, phase-I cost of the project is Rs 4,010 crore. The private partner will shell out Rs 970 crore and the state govt has to raise the remaining Rs 3,040 crore. The Vizhinjam International Seaport Ltd (VISL) has also asked the state govt to get the centre extend the Cabotage relaxation given to the Vallarpadom ICTT to the proposed Vizhinjam project also.

Vizhinjam project: Kerala govt seeks VGF relaxation

It will make central assistance possible for the Vizhinjam international container transshipment terminal project.

On Tuesday, CM Oommen Chandy said in New Delhi that the Shipping Ministry has agreed to exempt Vallarpadom from Cabotage which sets down that only Indian ships should transport cargo between Indian ports. In 2010 itself, project consultants International Finance Corporation (IFC) had advised the govt to seek Cabotage exemption for Vizhinjam port.