THIRUVANANTHAPURAM: Kerala's Chief Minister, Pinarayi Vijayan, on Saturday, appealed to Prime Minister Narendra Modi to reconsider the central government's directive requiring the state to repay the Viability Gap Fund (VGF) for the Vizhinjam Seaport project in instalments.
In the letter, the Chief Minister asserted that the Vizhinjam International Seaport project would be the only instance in the country where the Centre has sought repayment of VGF assistance. The project is designed to benefit from VGF under the Scheme for Financial Support to Public-Private Partnerships (PPP) in infrastructure, managed by the Department of Economic Affairs, Ministry of Finance.
The Ministry has sanctioned an amount of Rs 817.80 crore as VGF for the project.
However, for the disbursement of the VGF amount, the Union Ministry of Finance has stipulated that the assistance must be repaid by the Kerala government in Net Present Value (NPV) terms through premium (revenue) sharing.
The chief minister said in the letter ; "Needless to say , if the Centre insists upon the payback, the assistance provided would not be a capital grant but would be a loan. This clearly contradicts the very intent of the scheme."
It also mentioned that despite the state government's repeated requests to the Union Ministry of Finance at various levels to revoke this condition and release the VGF unconditionally, these appeals have not been favorably considered.
The Chief Minister pointed out that because the Rs 817.80 crore provided by the Central government is to be repaid on an NVP basis, it would result in an actual repayment of Rs 10,000 to Rs 12,000 crore from the state exchequer, based on projected interest rates and expected revenue from the port.
In addition to the Viability Gap Funding (VGF) of Rs 817.80 crore provided by the Centre, the Kerala government has also contributed an equal amount as VGF to the Concessionaire. Furthermore, the state is investing Rs 4,777.80 crore in the project. The significant investment made by the state in a project of national importance, despite its limited financial resources, should be given due consideration, the Chief Minister stated.
