Vizhinjam Port Gets Rs 817.8 Crore VGF Under Tripartite Agreement

Adani Vizhinjam Port, IDBI Bank, and Department of Economic Affairs (DEA) signed a tripartite agreement to enable disbursement of Rs 817.8 crore in viability gap funding (VGF) for the Vizhinjam transhipment port in Kerala. The state government is a conforming party to the agreement.

The VGF, a one-time Central grant to support public-private partnership (PPP) projects which are economically sound but financially unviable, is part of the total Rs 1,635 crore granted to Adani Ports and Special Economic Zone (APSEZ) - Rs 817.8 crore from the Union government and Rs 817.18 crore from the Kerala government. The VGF component was the sole basis for awarding the port development contract to APSEZ in 2015.

Of the total amount, Rs 1,227 crore will be released during the construction phase, with the remainder disbursed over the 40-year operation period, extendable by 20 more years. The port began commercial operations in December 2024 and has since handled over five lakh twenty-foot equivalent units (TEUs). The port, built with a total investment of Rs 7,700 crore, leverages superior water depth and proximity to main shipping lanes. The PPP component of the project cost stands at Rs 4,089 crore.

APSEZ financed Vizhinjam from internal resources, with IDBI Bank acting as senior lender by holding Rs 500 crore in debentures. A supplementary concession agreement was signed with the Kerala government last year to accelerate the project timeline, with the final phase now expected by 2028, 17 years ahead of schedule. The port’s operational concession has been extended till 2060.

Environmental clearance has been received for Phases-2 and 3, which entail an additional Rs 9,540 crore investment and will significantly scale operations, container capacity will rise to 4.87 million TEUs and total cargo handling to 94.6 million tonne, up from 11.61 MT.

News by Rahul Yelligetti.