**Executive Summary**
This document summarizes the Record of Discussion (RoD) of the 41st Meeting of the Empowered Committee regarding the Vizhinjam International Multipurpose Seaport Project and provides an addendum to it. The main purpose is to consider and grant final approval for Viability Gap Funding (VGF) support for the project. The document advises the Government of Kerala (GoK) to share the Judicial Commission report to facilitate the DEA process. The date of the meeting was June 27th, 2022.
**Key Points / Main Content**
* **Project Details**
* Project Name: Development of Vizhinjam International Multipurpose Seaport Project
* Type of PPP: Design, Build, Finance, Operate and Transfer (DBFOT)
* Total Project Cost (In-Principle): Rs. 4,089 Cr
* Grant (In-Principle): Rs. 1,634.98 Cr (Rs. 817.80 Cr from Government of India, Rs. 817.18 Cr from Government of Kerala)
* Appointed Date: 05.12.2015
* Concession Period: 40 years, extendable by 20 years (capacity augmentation) and further extendable by 20 years (mutual agreement)
* Capacity: Planned for 1 million TEUs with 800 m long berth
* **Empowered Committee (EC) Observations and Decisions**
* The EC noted the Government of Kerala's (GoK) responses to issues raised related to CAG observations.
* The EC emphasized adherence to concession period and pre-determined tariff as approved in the In-principle approval.
* The EC decided that Government of Kerala should enforce the tariff as per the concession agreement.
* The Concession period for the project shall be taken as 40 years, extendable by 20 years on capacity augmentation and further extendable by another 20 years on mutual agreement between the GoK & the concessionaire.
* The EC capped the total VGF to the concessionaire at Rs. 1635 Cr (Government of India share is Rs 817.8 Cr) and the TPC of the project shall be fixed at Rs. 4,089 Cr for computation of VGF.
* The EC did not accept GoK's request to waive revenue share with GOI; GoK must enter into an agreement with GOI (DEA) for revenue sharing before VGF disbursement.
* The EC accepted GoK's request not to impose additional conditions of giving priority to GOI in revenue share, the original formula should prevail.
* **Judicial Commission (JC) report and Recommendations**
* EC advises GoK to share the JC report at the earliest.
* The JC report recommends some action on the part of the State government and that Some deviations from the concession agreement were also reported.
* The EC recommended approval of Rs. 817.80 Crore VGF from the Gol for the development of Vizhinjam International Multipurpose Seaport Project, as requested by the GoK.
* Further actions include execution of Tripartite Agreement, Premium Sharing agreement, and VGF disbursal.
* **Comments from EC Members (Addendum)**
* **Department of Expenditure:** The Department has no comments and is to follow existing rules for disbursal of VGF support.
* **Ministry of Ports Shipping & Waterways:** The Ministry has already supported the project and has no further comments. DEA may take further action on the project proposal as per the extant policy and precedents.
* **NITI Aayog:** The Commission Report circulated has been seen and NITI Aayog has no comments.
* **Department of Economic Affairs:** There is no adverse finding in the JC Report that would impact the VGF disbursal committed by the Government.
* **Department of Legal Affairs:** No specific legal issues were raised for consideration. It is for the Department of Economic Affairs to examine the report.
**Impact Analysis**
**Impact**: The Chief Secretary of the Government of Kerala needs information on the final approval of VGF support for the Vizhinjam International Multipurpose Seaport Project.
**Action Required**: The Chief Secretary must share the report from the Judicial Commission on the project as soon as possible to facilitate the final approval of VGF support.
Key Entities Referenced
Vizhinjam International Multipurpose Seaport Project: The main subject of the policy, aiming to develop a seaport in Vizhinjam.
Empowered Committee: Committee responsible for considering and granting final approval for VGF support.
VGF Scheme: Viability Gap Funding Scheme, providing financial support for infrastructure projects.
Government of Kerala (GoK): The government entity responsible for project execution, seeking approval.
Department of Economic Affairs (DEA): The department within the Ministry of Finance that handles the VGF disbursement and related agreements
No. 2/2/20'18-lSD
Government of India
Ministry of Finance
Department of Economic Affairs
lnfrastructure Finance Secretariat
lnfrastructure Support & Development Division
5th Floor, Jawahar Vyapar Bhawan,
Tolstoy Marg, New Delhi
Dated '1 oth octobet, 2022
Office Memorandum
Addendum to the RoD of 4l"t Meeting of the Empowered Committee to
consider granting Final approval for VGF support for the development of
Vizhinjam lnternational Multipurpose Seaport Project, received from
Government of Kerala-reg.
The undersigned is directed to forward the Addendum to the RoD of 41st
Meeting of the Empowered Committee to consider granting Final approval for VGF
support for the development of Vizhinjam lnternational Multipurpose Seaport Project,
received from Government of Kerala for tnformation and necessary action.
2.
This issues with the approval of Secretary, Economic Affairs
(Dr. Molishree)
Deputy Secretary to the Government of lndia
To,
1. CEO, NlTl Aayog, Yojana Bhawan, New Delhi
2. Finance Secretary & Secretary, D/o Expenditure, North Block, New Delhi
3. Secretary, Ministry of Ports, Shipping & Waterways, Parivahan Bhawan, New
Delhi
4. Chief Secretary, Government of Kerala
Copy to:
Sr. PPS to Secretary (EA)
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2 Sr PPS to JS (lSD)Addendum to the RoD of 41"1 Meeting of the Empowered Committee to
consider granting final approval for VGF support to the project proposal for
the development of Vizhinjam lnternational Multipurpose Seaport Project
received from Government of Kerala.
7. The 41't Meeting of the Empowered Committee (EC) chaired by Secretary,
Department of Economic Affairs (DEA) was held on 27th June, 2022 for
considering Final approval for VGF support for the development of Vizhinjam
lnternational Multipurpose Seaport Project, received from Government of Kerala
(GoK).
2. During the course of the meeting, it was unanimously decided that lhe responses
fl
provided by the GoK to the lssues raised by the EC members, 84th in tight of
CAG obsevations and subsequent lssues raised by the DEA appear satisfactory.
However, since the State Government has appointed a Judicial Commission to
examine lhe lssues raised by CAG, therefore it would be prudent to look at the
verdict of the Judicial Commission (JC) about the Project before obtaining final
disbursement for the VGF. GoK is advised to share the repoft at the earliest in
order to facilitate the DEA to process the proposal for the final approval of the
VGF Supporl for the project expeditiously.
3. ln light of the above, GoK vide letter dated 12th August 2022 submitted the JC
report which was duly circulated to all the EC Members. Although Department of
Legal Affairs (DoLA) is not a member of EC, the report was also forwarded to
DoLA also for their comments. The comments by the EC members and DoLA are
provided as below:
Department of Expenditure:
The Depaftment has no comments to offer. Department of Economic Affairs
is to follow existing rules and regulations for disbursal of VGF suppotl to the
instant proposal.
Ministry of Ports Shipping & Waterways:
This project is paft of Maritime lndia Vision 2030 and Ministry of Pofts,
Shipping & Waterways has already supporied the project. The Ministry has
no fufther comments to offer in this matter. Depaftment of Economic Affairs
may take further action in the project proposal as per the extant policy and
precedents.
NlTl Aayog:
t
The Commission Repoft circulated has been seen and NlTl Aayog has no
comments thereon. With respect to disbursal of VGF support to the project,
2the same is to be in accordance with the conditions and process prescribed
in the VGF Scheme and the Guidelines thereto.
Department of Economic Affairs:
The Repoft was looked at by DEA with an obiective to find out the impact of
its findings on the VGF committed by Gol. There is no adverse finding in the
Report which has an impact on the VGF disbursal committed by the
Government
Department of Legal Affairs:
V
The JC report recommends some action on the part of the state government.
Some deviations from the concesslon agreement were also reported. No
specific legal issue ls rarsed for our consideration. ln the absence of any legal
issue, we have no comments to offer. lt is for the Department of Economic
Affairs to examine the repott from the angle of policy and precedent and take
fufther course of action in consultation with the State government.
4. Being a state project executed by the state government, and the iudicial
commission appointed by the state government, the limited point to look at the
verdict of the judicial commission was to observe the impact of its findings on the
VGF committed by Gol. without passing any value judgement on the JC report.
Overall, there is no adverse finding in the Report which has an impact on the
VGF disbursal committed by the Government. Moreover, the Commission
concluded by stating that unless the Government actively renders suppoft and
assists the Concessionaire, the project will not be completed within the scheduled
time, which will adversely affect the Government also.
5. Therefore, the Empowered Committee unanimously recommended to the
Competent Authority the approval of the VGF support of Rs.817.80 Crore from
the Gol for the development of Vizhinjam lnternational Multipurpose Seaport
Project, as requested by the GoK.
6. Further actions regarding execution of Tripartite Agreement, Premium Sharing
agreement on the lines of the Tripartite Agreement, and the disbursal of VGF
support may be undertaken by DEA as per process prescribed in the VGF
Scheme and the Guidelines.
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