Kerala CM urges PM to withdraw decision on VGF for Vizhinjam Port Project

Kerala Chief Minister Pinarayi Vijayan has written a letter to Prime Minister Narendra Modi, urging him to intervene and withdraw the Finance Ministry's decision requiring the State to repay the Viability Gap Funding (VGF) for the Vizhinjam International Seaport project.

In a letter dated December 10, Kerala Chief Minister Vijayan said, "As the Rs 817.80 crore provided by Government of India is to be repaid on Net Present Value (NPV) basis, this would result in repayment of Rs 10,000 to 12,000 crore from the State Exchequer in actual terms, computed on projected interest rates and revenue realization from the port over the period of repayment."

Chief Minister Vijayan pointed out that the Centre'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 of India, the assistance provided would not be a capital grant but would be a loan. This clearly is contrary to the very intent of the scheme," the letter read.

Highlighting Kerala's significant Rs 5,554 crore investment in the project, Chief Minister Pinarayi Vijayan called for the withdrawal of VGF.

"Considering the major investment made by the State (Rs. 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is only just and fair that the decision requiring repayment of Rs. 817.80 crore provided by Gol as VGF in NPV terms is withdrawn at the earliest," the letter read.

In November Chief Minister Pinarayi Vijayan had written to Finance Minister Nirmala Sitharaman, seeking her intervention for the release of the share of the Centre in the Viability Gap Funding (VGF) for the Vizhinjam International Seaport, without imposing the condition that the State must repay it later.

In June, the Union Cabinet, chaired by Prime Minister Narendra Modi approved the Viability Gap Funding (VGF) scheme for offshore wind energy projects.

The VGF scheme aims to support the installation and commissioning of 1 GW of offshore wind energy projects, with each project contributing 500 MW off the coasts of Gujarat and Tamil Nadu.

This initiative reflects the government's commitment to enhancing the country's renewable energy capabilities and reducing reliance on fossil fuels.

The scheme includes a dedicated outlay of Rs 6853 crore for the establishment of 1 GW of offshore wind energy capacity. This will be equally distributed between two projects, each with a capacity of 500 MW, situated off the coasts of Gujarat and Tamil Nadu.