Kerala hits out at Centre over VGF repayment for Vizhinjam port, calls it 'financial exploitation'

Thiruvananthapuram: Kerala Ports Minister V N Vasavan has termed the Union Government’s demand for the return of the Viability Gap Fund (VGF) provided for the Vizhinjam International Port as discriminatory. He asserted that Kerala would intensify pressure on the Centre, pointing out that the Union Government has not invested even a single rupee in the port's construction so far.

The Central Government had allocated ₹817.80 crore as VGF for the Vizhinjam project but has now stipulated that it be repaid as a share of the port's profits. This condition was communicated by Finance Minister Nirmala Sitharaman in response to a letter from Kerala Chief Minister Pinarayi Vijayan, who had requested the withdrawal of this repayment clause.

Comparison with Tamil Nadu Sparks Concerns

The state has highlighted the disparity between the Vizhinjam project and Tamil Nadu’s Tuticorin Outer Harbour Project, which received ₹1,411 crore from the Centre without any repayment clause. Kerala has demanded similar treatment for Vizhinjam, but Sitharaman clarified that the two cases are not comparable. Tuticorin is managed by the V.O. Chidambaranar Port Authority, which operates under the direct control of the Central Government.

Kerala claims that no previous project has been subjected to a similar repayment condition. The ₹817.80 crore VGF allocated for Vizhinjam is expected to increase to ₹10,000-₹12,000 crore, according to state sources. Kerala argues that this is tantamount to the Centre reaping large profits from a minimal investment.

Financial Contributions by Kerala

Kerala has already contributed an equivalent amount as VGF and invested ₹4,777.14 crore for the construction of the Vizhinjam Port and related infrastructure. Moreover, 70 ships have docked at Vizhinjam even before its official inauguration, generating over ₹50 crore in GST revenue for the Central Government. Kerala maintains that the Centre’s investment will be fully recovered within a year through GST revenue once the port becomes operational.

Despite this, the Centre continues to insist on the repayment clause, which Kerala considers unjust. The state remains firm in its stance and is expected to lobby for more equitable treatment in the coming days.