Kerala Chief Minister Pinarayi Vijayan has sought the intervention of the Prime Minister, Narendra Modi, to withdraw the decision of the Finance Ministry requiring the State to repay the Viability Gap Funding (VGF) for Vizhinjam International Seaport Project.
The Chief Minister in his letter said that the insistence to repay the ₹817.80 crore provided by the Union Government as VGF on Net Present Value basis would result in repayment of ₹10,000 to 12,000 crore from the State Exchequer in actual terms which is computed on projected interest rates and revenue realization from the port throughout repayment.
The Government’s stance deviates from the general VGF guidelines, which classify it as a one-time grant, not a repayable loan. “If the payback is insisted by the Government, the assistance provided would not be a capital grant but would be a loan. This is contrary to the very intent of the scheme,” the CM said in the letter.
Major investment
Considering the major investment made by the State (₹5,554 crore) and the returns accruing (including savings on foreign exchange) to the nation as a whole, it is only just and fair that the decision requiring repayment of ₹817.80 crore provided as VGF in NPV terms is withdrawn at the earliest, the Chief Minister said.
He pointed out that the five-month trial run operations of phase-I of the port, which commenced in July has been successful and the commercial operations started on December 3. With full phase development of the port is envisaged to be completed by 2028, Vizhinjam Port would become a significant link in the country’s logistics supply chain. This will significantly help achieve the government’s vision of bringing down logistics cost from the current level of 14 per cent to the global standard of 8 per cent as envisaged by the Prime Minister’s Gati Sakthi scheme, the chief minister said.
Though the State government has repeatedly requested the Finance Ministry at various levels to revoke the conditions, the Chief Minister said the request of the State has not been considered favourably.
