The Government of India has declined Kerala’s request to draw a parallel between the Tuticorin port and the Vizhinjam port regarding the conditions for providing the Central share of Viability Gap Funding (VGF).
Viability Gap Funding (VGF) Scheme
- VGF is a financial support scheme provided by the government to infrastructure projects that are economically sound but financially unviable.
- The Viability Gap Funding (VGF) Scheme was first started in 2004.
- It is often used in Public-Private Partnership (PPP) models to attract private investment.
- The purpose of VGF is to bridge the gap between the project cost and the expected revenue and to encourage private sector participation in infrastructure development.
- The government provides a grant, typically up to 20-40% of the total project cost, as part of the VGF scheme.
- For PPP projects, the agreement may include repayment or revenue-sharing clauses.
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About Tuticorin Port (Outer Harbour Container Terminal)
- Tuticorin Port (Outer Harbour Container Terminal) is located in Thoothukudi, Tamil Nadu, India.
- It is a major port on the southern coast of India, strategically located on East-West international shipping routes.
- The port is undergoing significant expansion with the development of the Outer Harbour Container Terminal.
- This expansion aims to increase the port’s capacity to handle larger vessels and more cargo.
- Authority: Developed and managed by V.O. Chidambaranar (VOC) Port Authority, an autonomous body under the Government of India.
- Funding Model: No repayment condition for VGF since the project is a Central initiative.
- Revenue and expenditure are directly managed by the VOC Port Authority.
- Operational Model: Not subject to any revenue-sharing agreements.

Vizhinjam Port (International Seaport)
- Location: Vizhinjam, Thiruvananthapuram district, Kerala, India
- Authority: Adani Vizhinjam Private Port Limited (AVPPL) under a public-private partnership (PPP) model
- Funding: State government support through a Viability Gap Funding (VGF) scheme
- Significance: Aims to be a major international seaport, enhancing India’s maritime trade, boosting Kerala’s economy, and creating employment opportunities.
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