A political row has erupted between the Kerala government and the Centre over the release of viability gap funding, to the tune of ₹817.80 crore, for the Vizhinjam International Seaport project.

The Kerala government argued that the Centre should release the money without stipulating repayment. Chief Minister Pinarayi Vijayan said the demand for repayment would result in an outgo of ₹10,000-₹12,000 crore from the State exchequer.

He also pointed out that the Centre had not made a similar condition of repayment for the outer harbour project of VOC Thoothukudi Port, which is structured on similar lines as Vizhinjam.

Vizhinjam port had received in-principle approval for viability gap funding under the ‘scheme for financial support to public-private partnerships in infrastructure’. The empowered committee constituted by the Department of Economic Affairs had recommended the project for final approval for ₹817.80 crore, the Chief Minister said.

Replying in the Rajya Sabha, Shipping Minister Sarbananda Sonowal clarified that, as per the approved financing arrangements of the Vizhinjam International Seaport project, the Kerala government must share with the Centre 20 per cent of the premium that the State will receive from the concessionaire from 2034 onwards. The State shall retain the rest.

The Minister pointed out that Kerala’s request to waive off the premium sharing between both governments had been deliberated upon and declined at the empowered committee meetings held in June 2022 and July 2024.

However, a request for the waiver was received in October 2024. After consideration, the request was not accepted as premium sharing was one of the conditions of the “in-principle” as well as final approval for the viability gap funding, the Minister said.

Referring to the outer harbour project in Thoothukudi port, the Minister said it is a central sector project wherein the expenditure is incurred by and the revenues accrue to the VOC Port Authority, an autonomous body under the administrative control of the Union government.