The proposed International Container Transhipment Port (ICTP) at the Galathea Bay in Great Nicobar Island has secured an in-principle recommendation from the Public Private Partnership Appraisal Committee (PPPAE) even after concerns were raised over commercial viability of the Rs 48,862 crore project by multiple wings of the government.The appraisal committee, which discussed the project on March 17 and 19, recommended it for consideration by the competent authority, a move closer to administrative approval.According to the official Record of Discussion of the PPPAC issued by the Department of Economic Affairs, questions were raised over whether the project qualifies for viability gap funding and how would ICTP compete with other well established transhipment ports such as Colombo, Singapore and Port Klang.The Department of Economic Affairs (DEA) had launched the Viability Gap Funding (VGF) scheme, providing financial support to socially and economically desirable public private partnerships (PPP) projects that are otherwise financially unviable.For the construction of the transhipment port, the Ministry of Port, Shipping and Waterways (MoPSW) sought Rs 12,230 crore in viability gap funding, equal to 25 percent of the total project cost.The Department of Expenditure raised concerns about whether the project is eligible for financial support under the current Viability Gap Funding scheme run by the Department of Economic Affairs.It also pointed out that the ministry is asking for special relaxations, such as not following fixed pricing rules, having flexibility in how funds are released, and not having to repay money if the project is cancelled. It was pointed out that acceding to the terms of the ministry may require modifying existing rules and could need approval from the Cabinet.It was decided in the meeting that the MoPSW may consider providing viability gap funding support through its own budgetary support.Under the proposal, 55 per cent equity is to be held by an Indian-owned and controlled private entity, while 45 per cent will be held by select major ports, including Kamarajar Port Limited.Presently, India has operational deep water ports, namely Visakhapatnam, Mundra and Vizhinjam, and in future Vadhvan port will also be the deep draft port. The ministry told the appraisal committee that the Galathea Bay project enjoys a strategic locational advantage, as the proposed project is located very close to the main East-West international shipping route, making it an ideal hub for global trade.“Owing to this proximity, the port is well positioned to attract transhipment traffic from the East Coast of India as well as neighbouring countries such as Myanmar and Bangladesh,” the ministry informed the committee.The Ministry informed that the Galathea Bay is geographically closer than Port Klang and Singapore, enabling both mother vessels and feeder vessels to achieve logistics cost savings if transhipment activities are shifted from these established foreign hubs to the bay.Elaborating on the risks involved, MoPSW said, “From a project standpoint in terms of risk, the two major risks identified are the development of a large-scale greenfield port project and the challenge of diverting and establishing transhipment traffic from existing, well-established ports. Despite these risks, the location and strategic relevance of the project underscore its importance,” it said.