Indian Port Adopts Innovative Loan Scheme
India’s premier container port, Jawaharlal Nehru Port in Navi Mumbai, has signed an agreement with State Bank of India and Development Bank of Singapore for external commercial borrowing in the amount 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.
The funds will be used by the JNPT primarily for expansion of its existing roads network connecting to its port project as the existing road network for evacuation of traffic is currently operated at a capacity utilization of 100 percent.
JNPT has U.S.-dollar denominated foreign currency earnings which were leveraged for the low-cost foreign currency borrowing.
The JNPT expansion is in line with Indian Prime Minister Narendra Modi’s port-led development program.
JNPT will be lending the $400 million to the Mumbai JNPT Port Road Company Limited (MJPRCL) for implementation of the road project. JNPT granted MJPRCL extended repayment terms for the funds beyond JNPT’s terms to the banks. The borrowing by JNPT included a 7.5 year repayment schedule. The lending by JNPT to MJPRCL is for 16 years.
The rate of JNPT’s loans comes out to approximately 3.15 percent which is less than the rates available for Indian currency loans.
The funding by JNPT is the first of its kind for a major port in India and it opens up one more avenue for major and government ports to raise funds by accessing international markets for their
The project will cater to the additional cargo which will be handled at JNPT’s Fourth Container
Terminal and allow the port double its capacity in the next seven years.
The innovative borrowing scheme was advocated by India’s Minister of Shipping and Road Transport
and Highways Shri Nitin Gadkari. JNPT is the first major port to finalize the terms of this sort of external commercial borrowing. Gadkari noted that other major ports in India may adopt the same means to improve their capability to invest.