THIRUVANANTHAPURAM: The Cabinet meeting on Wednesday decided to accept the Viability Gap Funding (VGF) from the union government for Vizhinjam port development. The state had earlier opposed the repayment condition for the VGF of Rs 817.80 crore.
The state has to repay the VGF in net present value terms through premium sharing. According to the state government's estimate, the actual repayment would be Rs 10,000 to Rs 12,000.
Chief Minister Pinarayi Vijayan had earlier written to Prime Minister Narendra Modi to avoid repayment conditions. The fund should be sanctioned without any conditions.
According to him, Vizhinjam was the first port project where the union government demanded VGF repayment. The VGF is sanctioned under the union government's scheme for financial support to public-private partnerships in infrastructure.
The CM argued in the letter that the repayment condition would make the assistance a loan and is against the spirit of the scheme envisioned as a capital grant.
According to the CM, the union government did not impose repayment conditions on the VGF granted to the outer harbour project linked to the Tuticorin Port in Tamil Nadu. The project was similar to that of the Vizhinjam port and both should be treated equally.
