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Rs 8-trn projects under Sagaramala in motion but funding a challenge: ICRA

ICRA Research believes that given the modest budgetary support of Rs 6 billion for Sagarmala project for the year, there continues to be significant challenges in terms of mobilisation of funding

Press Trust of India  |  New Delhi 

Port
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Fund mobilisation is likely to remain a challenge under the though 500 schemes worth Rs 8 trillion are currently being undertaken, ratings agency ICRA said on Thursday.

The government under the has set ambitious targets of port modernisation, port connectivity enhancement, port-linked industrialisation and coastal community development for phase-wise implementation until 2035.

As per the Ministry of Shipping's data, out of the 700 projects initially identified for execution, about 500 different projects valued at about Rs 8,000 billion (Rs 8 lakh crore) are currently in motion already and are at various stages of feasibility study/award process, the rating agency said.

K Ravichandran, Senior Vice President and Group Head, ICRA said, "We believe that there has been considerable progress on the implementation of the projects, especially in the port connectivity and port modernisation projects, where several project awards have been made.

"While about 15-20 per cent of the projects (out of the Rs 8,000 billion set in motion) are already under implementation, the balance portion of the planned projects, are currently at feasibility study stage."

At the same time, ICRA Research believes that given the modest budgetary support of Rs 6 billion for for the year, there continues to be significant challenges in terms of mobilisation of funding especially towards the other two pillars of Sagarmala - development of industrial clusters and coastal communities, where progress has been limited, the statement said.

The business risk profile of major ports, in addition to their government parentage, would benefit from the greater autonomy to decide financial and administrative matters and the flexibility to determine its tariff levels with the enactment of the Major Ports Authority Bill, 2016, it said.

Performance of some major ports remains constrained by connectivity issues and competition from more efficient non-major ports, it said.

Ankit Patel, Assistant Vice-President and Co-Head, Corporate ratings mentioned, "Given the high leveraging of some private port sector entities from the business, ICRA believes that consolidation trends could gather further momentum going forward.

First Published: Thu, April 12 2018. 22:32 IST
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