Officers of Kochi Port are worried that the Kerala government’s bid to promote Vizhinjam Port could affect their future.
The Cochin Port Officers Association has sent an SOS to the Shipping Ministry seeking its support to safeguard the Vallarpadam terminal.
“We are afraid that if the Vizhinjam terminal project becomes a reality, it will hurt the prospects of Vallarpadam project,” the Association said in a letter to the Shipping Minister.
Hence, the Association urged the Ministry to re-examine whether Vizhinjam project should be pursued without Vallarpadam terminal achieving its full potential.
The Association denied of the claims made by the State government that Vizhinjam will not pose any threat to Vallarpadam, saying that both the terminals are targeting the same transshipment and domestic cargo.
Regarding the project cost, it is said that the investment for Vizhinjam would be ₹5,160 crore with the State reimbursing ₹1,210 crore to the successful bidder for setting up breakwater, capital dredging, road and rail connectivity etc. Out of the balance project cost of ₹3,950 crore, the Centre has agreed to provide a VGF (viability gap funding) of 20 per cent (₹790 crore) with a similar amount from the State government also.
With this, the total project cost for Vizhinjam would come to around ₹2,370 crore for the bidder.
However, the maintenance dredging expenditure in Kochi has surged by about ₹72 crore per year following the commissioning of Vallarpadam project. But even if the NPV (net present value) of the dredging expenditure over 40 years was taken and added to the cost of Vallarpadam project, the total cost would be only ₹4,398 crore, which is less than the Vizhinjam project cost.
Quoting the feasibility report, the letter said that the State Government will not generate any return from the Vizhinjam project for 15 years before getting even ₹1 crore from the 16th year onwards. But in the case of Vallarpadam project, the terminal has been giving a royalty of ₹50 crore per year even at the capacity utilization of 35 per cent.
Given the situation, the association alleged that the proposed huge investment in Vizhinjam may be a loss to the nation and instead the project has to depend on its success to real estate component.
It was mentioned in the feasibility report that 30 per cent of the land acquired for the development (70 acres) can be used to put up 5.61 million sq fit of built up area for commercial purposes. This provides an opportunity with the bidder to invest in real estate.