The government is weighing an innovative plan to promote coastal shipping by introducing integrated public-private-partnership (PPP) port projects at major ports by clubbing vessel acquisition with viability gap funding (VGF) support.
VGF is a one-time grant given by the Central government for supporting public-private-partnership (PPP) projects in infrastructure that are economically justified but fall short of financial viability. A project can secure as much as 20 percent of the capital costs as a viability gap grant from the Central government.
The move follows a budgetary announcement from Finance Minister Nirmala Sitharaman.
“Coastal Shipping will be promoted as the energy efficient and lower cost mode of transport both for passengers and freight, through PPP (Public private-Partnership) mode with viability gap funding,” Sitharaman said in her Budget speech to Parliament on 1 February.
With the idea to address the issues of high procurement cost of vessels and uncertainty of cargo for coastal movement, various models are being explored and the Ministry of Ports, Shipping, and Waterways has held stakeholder consultations with shipping lines, terminal operators, NITI Aayog and other ministries dealing with commodities like fertiliser and coal to develop the “most appropriate model” to implement the budgetary announcement.
