Vizhinjam is the first port project in the
country to receive in-principle approval for VGF on February 3, 2015, under the
Scheme for Financial Support to Public Private Partnerships in Infrastructure,
the Chief Minister recalled in a letter to Sitharaman on Friday. The Empowered Committee constituted by
Department of Economic Affairs had recommended the project for final approval
under the scheme at its 41st meeting for an amount of ₹817.80 crore.
The Chief Minister said, the Empowered Committee
had laid down a condition that VGF disbursed by the Centre to the
Concessionaire should be repaid by the State government in Net Present Value
(NPV) terms by way of premium (revenue) sharing. But VGF, he pointed out, was
introduced to encourage Public Private Partnership (PPPs) in infrastructure
projects that are economically justified but not financially viable without
additional financial support.
Vijayan cited an instance in which Department of
Economic Affairs had accorded as recently as in November, 2023, in-principle
approval for Outer Harbour project of VO Chidambaranar Port in Tamil Nadu,
which is structured on similar lines as the VISL. “However, the condition that
VGF must be repaid is not imposed here. The Draft Concession Agreement (DCA)
looks at revenue in this case from the 11th year onwards with a cap of 35 per
cent.”
Given the fact that ports account for a lion
share of Customs duties collected (estimated in the Union Budget for the
current year at ₹2.38 lakh crore), the VISL, which is to be commissioned in
December, will soon contribute very significantly to this, the Chief Minister
claimed. Out of every one rupee collected, the share accruing to the Centre is
approximately 60 paise while Kerala gets to retain less than 3 paise to a rupee
as its share of central taxes, he added.
“Even
on a very modest assessment, if VISL were to account for ₹10,000 crore annually
by way of Customs Duties, the Centre would derive additional revenue of ₹6,000
crore every year. Furthermore, the direct
and indirect benefits to the nation and the savings of foreign exchange that
results from establishing such a port would be very substantial,” Vijayan
pointed out.