MUMBAI : State-owned Jawaharlal Nehru Port Authority (JNPA), which is helming the construction of a mega port at Vadhvan near Dahanu in Maharashtra’s Palghar district, has hired IDBI Capital Markets and Securities Ltd as transaction advisor to raise funds for the project.

The upfront equity commitment, determined in collaboration with the lenders, is aimed at boosting lenders confidence in the project, bringing greater predictability to project execution, and reducing the Interest During Construction (IDC) component.

The debt will be raised in phases subject to finalisation of project structuring and timeline of revenue generation on the back of award of concessions to private firms for running cargo terminals.

The project is currently awaiting environmental and coastal regulation zone clearances and investment approval from the Union government. These are expected by March-April.

The new port will be developed by Vadhvan 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, with an investment of Rs 76,220 crore.

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 Vadhvan Port Project Ltd (VPPL) with an investment of Rs.43,622 crores. This includes an investment of Rs.1,765 crores by the Ministry of Railways for external rail connectivity, Rs.2,881 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 Rs.37,244 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 finalised in consultation with lenders.

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.

VPPL 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.

The planned deep water port will help India break into the list of countries that are among the top 10 global container ports. Vadhvan Port will be designed to handle 24.5 million twenty-foot equivalent units (TEUs) a year, a capacity which none of the existing Indian ports can offer due to natural limitations.

Further, its strategic location on the west coast at a short distance from the international sea route, helps Vadhavan Port to position itself as a hub port in the Arabian Sea catering to the container traffic of east coast of Africa, India’s west coast, and countries in the Persian Gulf.

Vadhvan will be the first Major Port (owned by the Union government) to be built in more than two decades (the last was Kamarajar Port in Tamil Nadu which started operations in February 2001). It will also be the first major port to be developed in partnership with a State Government.