JNPT becomes first port to take loans in dollars

 India’s premier container port, Jawaharlal Nehru Port Trust in Navi Mumbai, has signed an agreement with State Bank of India and Development Bank of Singapore for External Commercial Borrowings (ECB), to the tune of $400 million at a “very competitive” interest rate to improve the infrastructure required for “doubling” its existing capacity to 9.85 million TEUs annually.

JNPT has US Dollar denominated foreign currency earnings, which can be leveraged for a low-cost foreign currency borrowing — and becomes the first major port in the country to have taken loans in dollars.

The ECB of $400 million ($300 million from SBI and $100 million from DBS) will be primarily utilised by JNPT for expanding the network of roads that connect to its port projects.

The existing road network for evacuation of traffic is currently operated at a capacity utilisation of 100%, and the expansion is needed for quicker and more efficient evacuation of traffic.

The agreement with SBI and Development Bank of Singapore was signed by JNPT Chairman Anil Diggikar in the presence of Minister for Shipping, Road Transport and Highways Nitin Gadkari after the Reserve Bank of India granted approval to JNPT for raising $400 million with an end use of on-lending to Mumbai JNPT Port Road Company (MJPRCL) for implementation of road project, according to a press statement.

The Ministry of Shipping has already granted its approval as required under the Major Port Trusts Act,1963.
“The funding by JNPT is the first-of-its-kind for major ports, and it opens up one more avenue for major and government ports to raise funds by accessing international markets for their requirements,” Gadkari said.

Borrowing by JNPT is for door-to-door tenor of 7.5 years. However, lending by JNPT to MJPRCL is for 16 years (two years construction and 14 years repayment). The funding process involved assessment and structuring of cash-flows (both at JNPT level and MJPRCL level), bid process management, engagement of domestic and foreign lenders. The project will be developed by Mumbai JNPT Port Road Company (MJPRCL), a joint venture company of NHAI, JNPT and CIDCO at a total estimated cost of Rs 2,895 crore.