Earlier, state-owned lender Power Finance Corporation Ltd (PFC) offered to underwrite the entire debt of Rs 27,283 crore for the construction of the port that will be designed to handle some 298 million tonnes (mt) of cargo a year (including 24.5 million twenty-foot equivalent units or TEUs) with an investment of Rs76,220 crore.
In April, officials from the JICA India office met Unmesh Wagh, Chairman, Jawaharlal Port Authority to discuss funding for the project.
“The structure which JNPA has come up with for implementing the project and the prospect the new port has, even JICA is interested,” Wagh told ET Infra.
“We have structured it so well, all the clearances are in place, the traffic projections are so meticulously done and the most efficient port of India having solid financial projection for the next 30 years is helming the project are some of the reasons for the flurry of interest from potential lenders,” Wagh stated.
“Besides, the PPP (public-private-partnership) ability of the terminals is huge with the new port becoming self-sufficient quickly, nudging the financial institutions to look at funding the project,” he added.
The port project is awaiting cabinet clearance which is expected after a new government is sworn in after the polls in June.
The new port will be developed by Vadhavan Port Project Ltd, a joint venture between JNPA (74 percent stake) and Maharashtra Maritime Board (26 percent equity), in two phases under the landlord model, per the government policy.
Under the landlord port model, basic and common port infrastructure necessitating upfront investment such as breakwater, dredging, reclamation and shore protection bund, rail and road linkages, power supply, water supply lines and other services will be developed by the publicly owned joint venture company while the cargo handling infrastructure will be outsourced to private firms.
Accordingly, the core and common infrastructure including breakwater, dredging, reclamation, shore protection bund, tug berth, approach trestles and unpaved developed land, rail and road linkages, off dock rail yard, rail exchange yard, power and water and internal road will be built by Vadhavan Port Project Ltd (VPPL) with an investment of Rs43,622 crores.
This includes an investment of Rs1,765 crores by the Ministry of Railways for external rail connectivity, Rs2,881 crores for external road connectivity by the Ministry of Road Transport and Highways/National Highways Authority of India and Rs356 crores as depositary works from Maharashtra Jeevan Pradhikaran and Maharashtra State Electricity Distribution Company Ltd.
The remaining project cost of Rs37,244 crore will be invested by the private operators of container terminals, multipurpose berths, coastal cargo berths, RO-RO and liquid berths selected by VPPL.
The new port will be funded on a debt-equity ratio of 70:30 backed by corporate guarantees from JNPA and Maharashtra Maritime Board (MMB). The equity contributions of JNPA and MMB would be in line with their respective shares, according to the financial structure.
The total debt requirement for the project is estimated to be around Rs 27,283 crore (Rs 21,598 crore in Phase 1 and Rs5,685 crore in Phase 2). The debt will be arranged progressively throughout the project execution in phases.
Vadhavan Port Project Ltd will explore multiple options for raising long-term debt, including rupee term loans from banks and financial institutions, Non-Convertible Debentures (NCD’s) and External Commercial Borrowings (ECB’s) with the aim of optimally matching the project’s cash flows with the most advantageous financial arrangement.
JNPA’s robust financials and track record of fund-raising through different channels, along with Maharashtra Maritime Board’s debt-free operations, are expected to support VPPL’s equity and debt-raising endeavours, officials said. Further, JNPA’s project execution capabilities and experience in developing and operating container terminals, provide comfort in timely execution of the new port project, the officials said.
With cash reserves of some Rs6,500 crore and projected net cash accrual of about Rs8,868 crore over the next five years, JNPA is well placed to meet the equity demand for the capital expenditure program.
Similarly, Maharashtra Maritime Board’s operations are characterized by steady cash flow generation, marked by steady growth in profits aided by long-term contractual agreements and critical infrastructure connectivity.
