31-03-2016

Jawaharlal Nehru Port Trust to raise Rs2,600 crore from DBS, SBI

JNPT

Jawaharlal Nehru Port Trust (JNPT), which ships more than half of India’s container cargo passing through its ports, plans to raise as much as Rs.2,600 crore ($400 million) in dollar-denominated loan from DBS Bank Ltd and State Bank of India (SBI) to help fund a road widening project for faster evacuation of cargo. “We have got very competitive rates from bankers,” Neeraj Bansal, deputy chairman of JNPT, said.

“DBS quoted for lesser amount while SBI quoted for the full amount but there was a marginal difference in rates between the two. So, we asked SBI to match the rates quoted by DBS and SBI agreed. We will avail of the loan from DBS and SBI,” Bansal added, without divulging the rates offered by the two lenders in what would be the first such external commercial borrowing (ECB) by a state-owned port.

ICICI Bank, EXIM Bank, Deutsche Bank and Citibank had also submitted quotations for the loan to be split in two tranches with tenures of 7.5 years and 10 years. The port will also seek approval from the government to collect the so-called vessel-related charges in dollars during the loan repayment period to hedge against fluctuations in exchange rates. Vessel-related charges or the so-called marine charges such as port dues, berth hire and pilotage are paid by ships calling at a port. Vessel-related charges for foreign-going vessels are denominated in dollars but collected in rupees after applying the prevailing exchange rate, according to a practice followed since 1991.

Whereas, cargo-related charges at ports such as wharfage, crane hire, storage, warehouse, demurrage and estate rentals are denominated and collected in rupees. “We are seeking approval for collecting the vessel-related charges in dollars during the period when we have to repay these loans so that we can have a natural hedge against dollar fluctuations,” a port spokesman said.

Doubling the highway from the existing four-lane to cater to the growing traffic is estimated to cost about Rs.3,200 crore. While the highway project will be executed by India’s highway development agency, the National Highways Authority of India (NHAI), the project will be funded entirely by JNPT. The dollar loan plan is an initiative of the shipping ministry under which the 12 ports have been asked to explore the possibility of availing external borrowings, which are available at very competitive rates in the global market.

JNPT is looking to load over five million twenty-foot equivalent units or TEUs, driven by further improvements in productivity and efficiency at its three existing container terminals and the opening of a new terminal in February. A TEU is the standard size of a container and a common measure of capacity in the container business.

JNPT handled 4.467 million TEUs in the year ended March 2015, the highest since it was opened in 1989.

With another container terminal under construction, the port’s container loading capacity will more than double over the next seven years, putting a strain on the port’s cargo evacuation infrastructure, necessitating the need to widen the road linking the port to eight lanes.

“The dollar denominated loan will reduce the cost of funding the road widening project drastically,” a spokesman for the shipping ministry said.

Source: Live Mint

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