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Business News/ Politics / Policy/  Gadkari says Tamil Nadu will be given port project if Kerala dithers
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Gadkari says Tamil Nadu will be given port project if Kerala dithers

Though Kerala govt says it will go ahead with the `7,000 cr international port project at Vizhinjam, there is a lack of consensus over awarding it to Adani Group

Since Kerala seems undecided about the international port project at Vizhinjam, Nitin Gadkari says it is better to move the project to Tamil Nadu than lose traffic to Columbo. Photo: MintPremium
Since Kerala seems undecided about the international port project at Vizhinjam, Nitin Gadkari says it is better to move the project to Tamil Nadu than lose traffic to Columbo. Photo: Mint

Mumbai: Union shipping minister Nitin Gadkari on Wednesday said that the 7,000 crore international port project at Vizhinjam in Kerala might be moved to neighbouring Tamil Nadu if Kerala does not resolve its political differences over awarding the project to the Adani Group.

“If Kerala government is not able to resolve the differences over the project, then we will move the project to Colachel in Tamil Nadu near Kanyakumari. It is better to move the project than lose traffic to Colombo," Gadkari told reporters in Mumbai.

The port management has approved the lone bid submitted by Adani Group’s Adani Port and Special Economic Zone Ltd (APSEZ) to build the port but a final decision by the state government is pending due to a lack of political consensus.

The project is being opposed by some constituents of the Congress-led United Democratic Front government as well as the opposition Left Democratic Front due to the perceived proximity of Adani Group chairman Gautam Adani to Prime Minister Narendra Modi.

“If the people of Kerala don’t want development, we have nothing to say. I’m making it clear—because of the politics, I’m going to shift the international major project to Colachel in (neighbouring) Kanyakumari district of Tamil Nadu. Don’t blame me for that," Gadkari reiterated.

Though Kerala chief minister Oommen Chandy has said that the government will go ahead with the project, an all-party meeting called on Wednesday failed to hammer out a consensus. Mint tried to contact Kerala government officials on the phone but no one responded.

The price quoted by APSEZ seeks a grant of 1,635 crore for building the port. The Vizhinjam port project has received approval from the centre for Viability Gap Funding (VGF) worth 817 crore, the first time such a grant has been offered for an Indian port project.

VGF is a one-time grant given by the central government for supporting public-private-partnership projects in infrastructure that are economically justified but fall short of financial viability.

The Kerala government will collect a premium from the private operator from the 16th year of operations, which will be equivalent to 1% of the gross revenue from the facility.

The premium collected from the private operator will rise by 1% every year till it reaches 40%.

In turn, the state government has agreed to share 20% of the annual premium it collects from the private operator till the VGF is repaid. The port project will have a contract period of 40 years, which can be extended by another 20 years.

Kerala has formed a separate company, Vizhinjam International Seaport Lltd (VISL) as a special purpose government company (fully owned by the government of Kerala) that would act as the implementing agency for the development of the greenfield port at Vizhinjam in Thiruvananthapuram district.

It is designed to cater primarily to container transhipments besides multi-purpose and break bulk cargo. According to a presentation posted on the Kerala government’s website, the Vizhinjam project has been modernised to enable it to compete with ports such as Singapore, Dubai and Colombo.

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Published: 04 Jun 2015, 01:44 AM IST
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