Vizhinjam Port: Kerala to ink agreement with Centre for VGF share on Wednesday

The Vizhinjam international port in Thiruvananthapuram.
| Photo Credit: SPECIAL ARRANGEMENT

The Kerala government will ink an agreement with the Union government on Wednesday as part of receiving the Centre’s share of ₹817.80-crore Viability Gap Fund (VGF) for the Vizhinjam International Port.

After months of uncertainty, a Cabinet meeting held in the last week of March decided to accept the Central share of VGF for the seaport project.

According to Port Minister V.N. Vasavan, the State will ink two agreements with the Union government at a function to be held at Mascot Hotel at 12 p.m. The first agreement will be a tripartite agreement between the Centre, the bank consortium, and Adani Vizhinjam Private Port Limited (AVPPL), the port concessionaire that developed the port, which will receive the money. Second is the premium sharing agreement with the Centre to be signed by Chief Secretary Sarada Muraleedharan. This agreement will ensure that the Centre receives 20% of the revenue from the port.

Officials from the Union government’s Department of Economic Affairs will also attend the ceremony.

With the completion of the VGF procedures, all the procedures in the first phase of Vizhinjam Port will come to an end.

According to the first agreement signed with Kerala and the Adani Group, the State government would start receiving its share of the port revenue from the 15th year after the port started operating. Although the port construction was delayed by around five years, according to a recent agreement reached now, the government will receive its share of the revenue from the port from 2034 itself.

Since the construction of all phases of the port will be completed by 2028 instead of 2045, the port concessionaire will pay a profit share of the revenue generated when all 4 phases are operational to the government from 2034. The Kerala government recently entered into a supplementary concession agreement with the AVPPL, advancing the second and third phases of work to 2028, instead of the 2045 deadline fixed in the first contractual agreement, said the Port Minister.

By 2028

As per the latest agreement, the AVPPL has agreed to complete all phases of the port by December 2028. Accordingly, the minimum installed capacity of the port will be 3 million TEU a year by 2028. The cost of the development of the second, third and fourth phases of the port is estimated at ₹10,000 crore. This amount will be borne entirely by the AVPPL.