Kerala Assembly: State to go ahead with Vizhinjam seaport expansion, says Ports Minister

Kerala government pushes forward with Vizhinjam seaport expansion despite Centre's delay in funding commitment.

Kerala Ports Minister V.N. Vasavan has said that “though the Centre is dragging its feet” on granting its share of viability gap funding (VGF) to the Vizhinjam seaport project, the State government will go ahead with the project expansion as scheduled.

Replying to questions in the Kerala Assembly on Monday (February 10, 2025), the Minister said Chief Minister Pinarayi Vijayan has written to the Prime Minister requesting revocation of the condition that the VGF assistance should be repaid by the State in the net present value (NPV) terms by way of premium or revenue sharing, and the State is waiting for a reply from his side.

In case the Centre refuses to give its share of ₹817.80 crore to the port project as committed earlier, the State will meet the expenses with the help of a NABARD loan and go ahead with the expansion project, said the Minister.

The State has already spent a sum of ₹2,159 crore for the project so far. The Centre’s argument is that the VGF share of the Centre should be repaid from 2034, when the State starts receiving its revenue share from the port project as per the agreement, for a period of 60 years, he pointed out.

Around 20% of the State’s revenue from the port should be given to the Centre for the next 60 years. This is expected to be around ₹10,000 crore to ₹12,000 crore when computing the projected repayment share of the revenue from the port over the 60 years of repayment from 2034, according to the letter written by the Chief Minister. The State is still hopeful of a positive reply from the Centre, and the port has witnessed the docking of 163 ships, including the trial period, handling around 3.20 lakh twenty-foot equivalents Unit (TEUs), said the Minister.

Although the port has been issued a provisional certificate to start commercial operations on December 3, 2024, the port concessionaire has to complete a few more works mentioned in the agreement before March 2025. The port will be given a completion certificate when the works listed in the ‘punch list’ are completed, said the Minister.

The land acquisition for constructing a railway tunnel from Balaramapuram to the project site, which will connect the port with the existing Indian railway network, is under way. The State is also in consultation with the Railways to set up a container rail terminal (CRT) close to any of the railway stations near the Vizhinjam port to ensure the transportation of containers through the railway network until the work on the railway tunnel is over by 2028, said the Minister.