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The Kerala Cabinet will provide a government guarantee for the ₹3,600-crore loan being raised from Hudco by Vizhinjam International Seaport Ltd (VISL), a special purpose vehicle overseeing the implementation of the ₹7,525-crore multipurpose, deep-water, international seaport and container transhipment terminal at Vizhinjam near here.
Bridge loan proposal
The finance department had approved a proposal to approach Hudco for a bridge loan as the Vizhinjam project strives to make good time lost to weather hazards and the fishermen’s strike. Work on 2,235 m of the three-km-long breakwater has been completed, while erection of cranes and other allied accessories is under way.
The port is expected to be operational by September according to the deadline fixed by the government. According to the concessionaire agreement signed with Adani Vizhinjam Ports Pvt Ltd, the latter will operate the port for 40 years, extendable by 20 years after commissioning, while the state government will be entitled to a portion of the revenue being generated after the first 15 years.
Defraying urgent spends
An official spokesman said on Wednesday VISL requires around ₹3,600 crore to defray the immediate and committed expenses of port construction, which includes ₹1,350 crore required for acquiring land as well as setting up rail-road connectivity to the port. Separately, the agreement between the State government and the concessionaire requires the former to pay up ₹1,450 crore in connection with the construction of the breakwater. The agreement also stipulates that ₹346 crore will need to be advanced to the company on completion of 30 per cent work on the breakwater.
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On its part, the government had promised the first tranche of funds would be handed over to the concessionaire in March, but it could cough up only ₹100 crore. This apart, the Vizhinjam port project is entitled to get viability gap funding (VGF) of ₹1,635 crore, to be shared by the Centre and the State government. The Centre recently approved VGF worth ₹818 crore to the concessionaire company, while the State government’s share of ₹817 crore has become due. The Hudco loan of ₹3,600 crore is aimed at meeting all these expenses since the funds-scarce government could not raise the resources on its own.