KOCHI: International Finance Corporation (IFC), a member of the World Bank Group, will act as the principal advisor to the Vizhinjam International Seaport Limited. IFC will provide services in structuring, marketing and implementing the project and attract investors through an open, transparent and competitive bidding process.
An agreement was signed in this regard here on Friday between IFC executive vice-president Lars Thunell and Vizhinjam Port CEO and secretary to the Government Department of Ports Sanjeev Kaushik.
The decision to appoint IFC as the advisor was taken by the Cabinet in October.
T he agreement will help bring international managerial capabilities and best practices for safeguarding the interest of stakeholders.
Lars Thunell told newsmen here that improved infrastructure facilities would lead to higher economic growth in India.
“IFC is partnering with Kerala to increase the capacity of the port in order to boost trade and create jobs. The goal is to make better use of resources, enhance economic activity and ensure quality services. IFC will work with the government to evaluate alternative usage of the port and recommend resizing and re-phasing of its development, thereby reducing risks. IFC will also support the government to design and implement environmental and social safeguards, keeping the interest of shareholders, customers and employees paramount, and help the port operate in its full potential.
“The option of funding for the port by the IFC will be decided later,” Kaushik said and added that private investors with relevant experience in other parts of the world would bring efficiency for building the port in Kerala.
On the fee being charge by the IFC, Kaushik said that it was structured in two components, the fixed part being Rs 80 lakh, broken into six milestones over a 24-month period.
Meanwhile, IFC themselves will bear all the administrative and travel expenses.
The success fee, which is the second part, is not payable by the government.
The success fee will be paid by the private partner, which is to be selected after the bidding process.
Kaushik said the the previous advisors were paid monthly retainer fee, but refused to divulge the details.
Thunnel said that container shipping lines reported huge losses in 2009 and were cutting routes and new ship orders.
“While many shipping companies and port operators have scaled back new investment plans, most are looking for Public Private Partnerships(PPP) with good fundamentals,” he said. Kaushik said that the goal was to be well-positioned when trade and economy recover.