THIRUVANANTHAPURAM: Union finance minister Arun Jaitley has given his official stamp of approval for viability gap funding (VGF) to the tune of Rs 800 crore for Vizhinjam International seaport project.

The state government received the intimation in this regard on Friday. The empowered institution and empowered committee under the Union ministry of finance had earlier recommended the seaport project for the government's viability gap funding.

Since some of the recommendations were found detrimental to the interests of the project as well as the state, Kerala had requested the Union government to have a relook into the matter.

Jaitley had assured the funding when chief minister Oommen Chandy recently called on him in New Delhi. The final decision on viability gap funding is the discretion of the Union finance minister and the Union cabinet need not have to ratify the same.

This is the first seaport project in the country to receive clearance for VGF. The Centre has approved 20% of the Rs 4,089-crore estimate prepared for the project's first phase. The state government should also raise 20% of the cost, while the contracting firm, constructing the port, should raise the remaining Rs 2,400 crore.

Additionally, the state government would have to shell out Rs 1,200 crore for dredging, reclamation and berth construction, and Rs 1,500 crore for acquiring land and arranging basic facilities such as power and water connection.

Three companies - Adani, Essar and a consortium of SREI and Spanish firm OHL - were in the fray for winning the contract.

VGF is a one-time or deferred grant provided to support economically justified infrastructure projects but falls short of financial viability. In India, VGF is for infrastructure projects that are to be undertaken through public private partnerships.

