Shipping ministry to raise Rs 5,000 cr via tax-free bonds

The shipping ministry will raise Rs 5,000 crore via tax-free bonds through the Maritime Finance Corporation, to be set up under its Maritime Agenda, 2020. Budget 2011-12 allowed the ports sector to raise this money by way of issuing tax-free bonds.

The ministry will finalise the agency within 15 days, after which it will follow the process of identifying a market lead manager for the issue. “Maritime Finance Corporation will be the best-placed organisation to do this job,” said a senior shipping ministry official. The money raised will be used to finance dredging operations and infrastructure requirements of major ports. Most maritime projects are specialised in nature and require specialised scrutiny and appraisal for obtaining finances for such projects. Such projects are funded by dedicated agencies.

“Project authorities in the maritime sector find it difficult to raise finances and achieve financial closure. A good maritime project, if appraised properly, might yield very good returns. Hence, it is quite desirable to float a specialised Maritime Finance Corporation with the equity of ports and financial institutions to fund port projects,” the official said.

Besides ports, other government undertakings allowed to issue tax-free bonds include Indian Railway Finance Corporation, Housing and Urban Development Corporation and Highways Authority of India. Budget 2011-12 allowed total tax-free bonds of Rs 30,000 crore. While sectors like railways and roads have dedicated bodies to raise funds, ports, until now, did not have any such body.

The government is planning to invest Rs 5 lakh crore in its maritime development programme up to 2020. The shipping ministry plans to increase the country’s port capacity to 3 billion tonnes by 2020, along with various policy reforms in the shipping and ports sector. Budget 2011-12 allocated Rs 97 crore for Cochin Port Trust’s rail connectivity project and approved Rs 193 crore to the Visakhapatnam and Mormugao Port Trusts.