India Begins $3.5 Billion Fundraising Drive To Build Its Largest Port

India has started the process of raising ₹30,000 crore (around $3.5 billion) in debt to fund the construction of the country’s biggest port, Vadhvan Port, located just a few hours north of Mumbai.

The project is being carried out by Vadhvan Port Project Ltd., which is jointly owned by the Jawaharlal Nehru Port Authority (JNPA) and the Maharashtra Maritime Board (MMB). JNPA holds a 74% stake, while MMB owns the remaining 26%.

According to the JNPA chairman and managing director of the project, Unmesh Sharad Wagh, the debt will be raised in two phases and will have repayment periods ranging from 15 to 20 years. The funding will be sourced from both domestic and international lenders.

The total cost of the Vadhvan Port Project is estimated at ₹78,057 crore (about $9 billion). The foundation stone for the port was laid last year by Prime Minister Narendra Modi.

Once fully operational, the port is expected to handle around 23 million twenty-foot equivalent units (TEUs) of containers annually, placing it among the world’s top ten container ports.

IDBI Capital has been appointed as the financial advisor for the first phase to begin the fundraising process. The goal is to arrange ₹22,000 crore (approximately $2.54 billion) in long-term loans to be distributed over five years. The request for proposals (RFPs) will be issued between October and December of this year.

Additionally, the two promoters, JNPA and MMB, will together invest ₹13,000 crore (roughly $1.5 billion) in equity funding for the project.

The company has also initiated discussions with multilateral financial institutions and has started land reclamation work on 1,200 hectares needed for the port’s development.

One of the major strengths of Vadhvan Port is its natural sea depth of 20 meters, which will allow it to host some of the world’s largest container ships, vessels that currently avoid Indian ports due to shallow waters.

Apart from enhancing India’s shipping capabilities, Vadhvan Port is expected to play a key role in the India-Middle East-Europe Corridor, an upcoming trade route connecting Asia with Europe via the Gulf region.

The central government has identified maritime development as a national priority. As part of the Union Budget presented in February, a Maritime Development Fund was proposed to provide financial support, either through equity or debt, to major infrastructure projects like Vadhvan.

References: Bloomberg, TOI

Source: Maritime Shipping News