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APSEZ seeks grant to build Kerala Port

Date 27-April-2015
Subject APSEZ seeks grant to build Kerala Port

Bengaluru: Adani Ports and Special Economic Zone Ltd (APSEZ), India’s biggest private port operator, has made the sole price bid for developing a new port at Vizhinjam, Thiruvananthapuram in Kerala.

The price quotation submitted by APSEZ seeks a grant of Rs.1,635 crore for building the Vizhinjam Port, which is equal to 40% viability gap funding (VGF) available for the port project from both central and state Governments.

The estimated project cost is Rs.4,089 crore. The four other bidders were Essar Ports Ltd, Gammon Infrastructure Projects Ltd, a consortium of Srei Infrastructure Finance Ltd and Obrascon Huarte Lain SA, and a joint venture of Concast Infratech Ltd and Hyundai Engineering and Construction Co. Ltd.

“An empowered Committee of the Kerala Government will submit its report on the APSEZ bid for the consideration of the Government,” said the sources.

The planned port project at Vizhinjam in Kerala has received approval from the centre for VGF worth Rs.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. A project can secure as much as 20% of the capital costs as VGF from the centre.

The Kerala Government, which is implementing the project, has agreed to chip in a matching 20% grant, taking the combined VGF available for the project to Rs.1,635 crore, the money APSEZ has sought for building the port.

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

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