Vadhavan Port: Japan International Cooperation Agency expresses interest in funding for the Project near Mumbai

This is the second major institution to express interest in backing the project, according to a senior official. Previously, the state-owned lender Power Finance Corporation Ltd (PFC) had offered to underwrite the entire debt amounting to Rs 27,283 crore for the construction of the port.

The Rs 76,220 crore container port project is a joint venture between Jawaharlal Nehru Port Authority and Maharashtra Maritime Board. The envisioned port is designed to handle approximately 298 million tonnes (mt) of cargo annually, including 24.5 million twenty-foot equivalent units (TEUs).

In April, representatives from the JICA India office engaged in preliminary discussions with Unmesh Wagh, Chairman of JNPA regarding potential funding for the project.

Wagh stated, “The structure devised by JNPA for project implementation and the promising prospects of the new port has attracted the interest of JICA.”

Moreover, Wagh emphasised the substantial potential of public-private partnerships (PPP) within the port terminals, envisioning rapid self-sufficiency for the new port, which in turn has garnered attention from financial institutions.

The project’s progression hinges on cabinet clearance, anticipated following the formation of a new government after the upcoming elections in June.

The development of the new port falls under the purview of Vadhavan Port Project Ltd, a joint venture between JNPA (holding a 74 per cent stake) and the MMB (with a 26 per cent equity share). The project will be executed in two phases under the landlord model, adhering to government policy guidelines Under this model, the joint venture company will undertake the development of essential port infrastructure, while cargo handling facilities will be outsourced to private entities. Key infrastructure, including breakwater, dredging, rail and road linkages, power supply, and water supply lines, will be developed. Various government bodies, including the Ministry of Railways and the Ministry of Road Transport and Highways will make external connectivity investments totalling Rs 5,002 crores.

Private operators selected by VPPL will invest in container terminals, multipurpose berths, and other facilities, with a total project cost of Rs 37,244 crore. The project will be financed through a 70:30 debt-equity ratio, with JNPA and MMB providing corporate guarantees. The debt, estimated at Rs 27,283 crore, will be arranged progressively over the project’s execution phases.

Multiple financing avenues, including bank loans, non-convertible debentures (NCDs), and external commercial borrowings (ECBs), will be explored to optimise financial arrangements.

Officials underscored the robust financials of JNPA and the debt-free operations of Maharashtra Maritime Board, which are expected to bolster equity and debt-raising efforts. JNPA’s project execution capabilities and experience further instil confidence in the timely realisation of the port project.

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, in February 2020, had approved setting up Vadhavan Port under the Sagarmala Programme.