Kerala Chief Minister Pinarayi Vijayan on Saturday wrote to Prime Minister Narendra Modi seeking to intervene and withdraw the finance ministry’s norm making it mandatory for the state to repay the Viability Gap Fund (VGF) for the Vizhinjam seaport project in installments.

Chief Minister Vijayan , In his letter, pointed out that since the Union Finance Ministry introduced the VGF scheme in 2005, never in the past such a payback has been demanded by the Finance Ministry under the VGF scheme.

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The Chief Minister said that the Vizhinjam International Seaport project would be the only case in the country where the Government of India has demanded repayment of the Viability Gap Funding (VGF) assistance provided.

Earlier, the Union Finance Ministry has rejected the Kerala government’s plea to reconsider its decision requiring the state to repay the Viability Gap Fund (VGF) for the Vizhinjam Seaport project in installments.

“As the Rs 817.80 core provided by the Government of India is to be repaid on a Net Present Value (NPV) basis, this would result in repayment of Rs 10,000 to 12,000 crore from the state exchequer in actual terms, computed on projected interest rates and revenue realisation from the port over the period of repayment,” CM Vijayan said in his letter.

If the payback is insisted by the union government, the assistance provided would not be a capital grant but would be a loan, he said .This clearly is contrary to the very intent of the scheme,” CM Vijayan added

The chief minister pointed that the state government had requested the Union Finance Ministry to cancel the new stance taken on the VGF repayment issue, but it was rejected.

Chief Minister Vijayan also mentioned in the letter that similar conditions were not included when VGF was sanctioned for the Outer Harbour project of the Tuticorin port.

Stating that Vizhinjam also deserves the same consideration as given to the Tuticorin Port, the Chief Minister requested the Prime Minister’s intervention for a favorable decision on the issue related to the VGF repayment of the Vizhinjam project.