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Amit Mitra

The sources said while the Finance Ministry had turned down the proposal, it has however given a cushion to the port to take up the project in the form of re-scheduling the repayment period.

Mumbai May 4

, THE Finance Ministry has thrown cold water over the Shipping Ministry's proposal that the Government have financial participation in the Rs 1,240-crore project for deepening of the entrance channel at Jawaharlal Nehru Port.

The port will now have to turn to the bonds market or tap foreign financial agencies to fund the project.

The Shipping Ministry had proposed that the Government have a financial participation in the project by converting the outstanding interest on the loans the port had earlier taken from it into equity.

After retiring a bulk of the Government loans, JNPT has an interest outstanding of Rs 727 crore that it has to repay to the Government.

"As the project involved huge investment, the port had suggested this route, which would have helped it hasten the channel deepening works," informed sources said.

The sources said while the Finance Ministry had turned down the proposal, it has however given a cushion to the port to take up the project in the form of re-scheduling the repayment period.

The Ministry had consented to offer a 10-year moratorium to the port for repayment of the outstanding interest.

When contacted, Mr Ravi Budhiraja, JNPT Chairman, confirmed this development, stating that: "the 10-year moratorium will lighten our burden when we go for fresh loans to take up the channel deepening project. We can retire the fresh loan, before repaying the interest outstanding to the Government."

The port is exploring the options of either tapping the bonds market or approaching foreign financial agencies to raise the money for the project.

"We will finalise the borrowing option within three months. Part of the investment will however be met through our internal resources," Mr Budhiraja said.

The port is likely to raise around Rs 600-700 crore from the market during the course of the next two years to implement the project.

Late last month, the port had received the PIB clearance for the project, while the CCEA (Cabinet Committee on Economic Affairs) approval is still awaited.

The channel deepening project has assumed significance for the port, as it was not being able to accommodate larger vessels due to draft restrictions.

The first phase of the project envisages an investment of Rs 640 crore for increasing the draft of the channel from the existing 12.5 metres to 14 metres, while the second phase would require Rs 1,600 crore for increasing the draft to 16 metres.

This has also now become essential as work on construction of the third container terminal, which was awarded to Maersk-Concor combine on BOT basis, is already on, while the port is finalizing proposals for a fourth container terminal.

At present, JNPT handles about 60 per cent of India's container traffic.

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