As the first phase of commissioning of the Vizhinjam Port is scheduled for December, the Central Government's move to convert its financial assistance into a loan has become a major challenge for Kerala. The state is deeply dissatisfied with the Central Government's decision to convert the Rs 817-crore viability gap funding (VGF) for the port into a loan. The state government has expressed its desire for the Centre to reconsider its stance and proceed with the commissioning as planned.

During the trial run, the Vizhinjam Port has already handled a historic milestone of one lakh containers. In this context, the Centre’s political maneuvering has added to the challenge.

Four months into the trial run, Adani Ports, which operates the port, has handled 1,00,807 containers. The world's largest shipping company, MSC, has unloaded containers from its 400-meter-long mother ships at the port. Cargo continues to be transported to and from both domestic and international ports. The state treasury has received Rs 7.4 crore in taxes from this revenue, which is a significant achievement considering no other port has handled as much cargo during its trial run.

Despite these favorable developments, the state has strongly criticized the Centre for not providing financial support. The Central and state governments, in collaboration with Adani Ports, are supposed to provide VGF for the construction of the Vizhinjam Port. The Centre was to provide Rs 817 crore for this purpose. However, it has yet to release the funds. Now, the Centre has offered to provide this amount as a loan, meaning the state government would have to repay it.

When the port becomes profitable in the future, the state will need to repay the equivalent amount of Rs 817 crore, which could amount to Rs 12,000 crore, according to Port Minister V N Vasavan.

Meanwhile, the Centre has provided non-loan VGF assistance for the Tuticorin Port in Tamil

Nadu, which has led to accusations from the state government of political discrimination. The Vizhinjam Port project was the first to receive approval for VGF assistance, and the state believes that the Centre is showing a “bias” in its treatment. In response, the Chief Minister has written to the Centre requesting a reconsideration of the loan terms. If there is no favorable outcome, the state plans to address the issue directly with the Centre.

Both the state government and Adani Ports are eager to invite the Prime Minister for the first phase of the commissioning of the port in December. However, with the Central Government now turning the VGF assistance into a loan, there is growing concern that this may hinder the planned commissioning of the first phase.