Former Minister questions decision on PPP

The former Minister for Ports M. Vijayakumar has accused the State government of a bid to sabotage the Vizhinjam port project by discarding the plan to develop it under the landlord model.

In a statement here on Wednesday, Mr. Vijayakumar said efforts were afoot to float a tender to develop Vizhinjam port under the public-private-partnership (PPP) model. Previous governments had tried this model thrice by floating global tenders, but had failed to elicit satisfactory response.

He said when the PPP model failed, the previous government had commissioned the International Finance Corporation (IFC) to conduct a study. The decision to select the landlord model was taken on the basis of the IFC report.

Under the landlord model, the construction of the port would be handled directly by the State government, while the port’s superstructure and operation would be the responsibility of a private player who would be selected through global tender.

He said the previous government led by the Left Democratic Front (LDF) had actually completed the procedures required to find funds for the project through Budget allocations and from a consortium of nationalised banks. The LDF government had entrusted the task of raising Rs.2,500 crore for the project to State Bank of India Capital Markets Ltd.

The LDF government had released sufficient funds to acquire land for the project, as well as the road link and rail link to the project site. Work had started on supply of electricity and water needed for the project. Work on the project would have begun during the term of the LDF government had there not been a delay in securing the Environmental Impact Assessment (EIA) completed by consultants L&T Ramboll.

The UDF government removed the IFC from the role of a consultant for the project. The only thing the UDF government had done for the project during the last two-and-a-half years was to forward L&T Ramboll’s EIA report to the Union Ministry of Environment and Forests.

Mr. Vijayakumar alleged that the project cost was projected upwards at Rs.4,000 crore by the present government under the expectation that the project would receive viability gap funding from the Union government. The State government had been claiming that the project would get Rs.1,000 crore by way of viability gap funding. However, only a few discussions had taken place between the State government and the Union government on this subject.

He noted that the tender floated by the previous government to select the port operator, who would also have to build the port superstructure, had placed the indicated cost of the activities at the level of Rs.1,000 crore. The consortium led by Welspun Infratech had quoted a grant of Rs.200 crore to supplement the cost indicated in the tender. “When this is the reality, how can the government execute this project under the PPP model at a cost of Rs.4,000 crore,” he asked.