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Rs 800 crore Viability gap funding for Vizhinjam port project

Posted on 30 Oct 2014

The Vizhinjam international seaport and container transshipment terminal project has cleared another hurdle with the Union government recommending it for viability gap funding.

A.S. Suresh Babu, Managing Director and Chief Executive Officer of Vizhinjam International Seaport Ltd. (VISL), said the Centre had recommended the project for a viability gap funding of Rs.800 crore, 20 per cent of the latest estimate of Rs.4,000 crore for the first stage.

Mr. Babu said the viability gap funding clearance would boost investor confidence in the project since it signalled the involvement of the Government of India. “It has significantly enhanced the prospects of getting a good concessionaire.”

The bidding process to select a private partner is progressing. VISL hopes to complete the tendering process by December, paving the way for commencement of work. The viability gap funding amount will be disbursed through banks to the selected concessionaire.

Five major port operating companies — Gammon Infrastructure Projects, the Hyundai-Concast consortium, Essar Ports, Adani Ports, and Srei- OHL, a consortium of Srei Infra and Spanish construction firm Obras-con Huarte Lain — are in the fray for the bid to build the port superstructure and operate the proposed deepwater container transshipment terminal. The State government had earlier sought viability gap funding for the project, proposed to be set up through the design, build, finance, operate, and transfer mode.

Minister for Ports K. Babu has welcomed the Centre’s decision. He said Vizhinjam was the first port project in India and the first project in Kerala to receive funding under the viability gap funding mechanism.