Gujarat Pipavav likely to get $170-mn boost from IFC

The International Finance Corporation (IFC), a members of the World Bank Group, is considering $170 million loan to Gujarat Pipapav Port Limited (GPPL) for expansion of its existing container and bulk cargo terminal facility in Amreli district of Gujarat.

"The total project cost (of expansion) is estimated at approximately US$303 million. IFC is considering financing a part of the same through an A loan of upto US$60 million and syndicated B loans of upto US$110 million," the World Bank group members said on its website.

The expansion has been planned in two phases. "However, decision on Phase II expansion, while planned, will be taken only after completion of Phase I. IFC is considering partly financing the proposed Phase I expansion," the IFC added.

Following this phase I expansion GPPL's container handling capacity is likely to expand from 0.85 million twenty-foot equivalent unit (TEU) to about 1.5 million TEUs and the bulk cargo handling capacity from 5 MMTPA (million metric tonne per annum) to about 10 MMTPA.

The phase I of GPPL would include construction of a second 348 meter container berth, 110 meter extension of bulk berth 1, dredging at berth 5 as well as berths 1-3 to achieve a draft of 14.5 m; expansion of the container yard; purchase and installation of additional container and bulk cargo handling equipment; and upgradation of the existing 10 km road connecting the Port to the national highway.

Phase II expansion will involve port capacity increase through: addition of second liquid cargo berth; expansion of container and bulk storage areas; addition of liquid cargo terminal; and addition of container, bulk and liquid cargo handling equipment.

"With this increased capacity, GPPL will be able to better serve shippers who are currently facing capacity constraints and reduce costs for shipping lines and consumers by handling larger vessels," the IFC further said about the anticipated development impact of the project.

According to IFC, although GPPL has been loss-making till date, with a 45 per cent increase in container volumes, it recorded its first ever net profit in 2011. "As GPPL seeks to expand, it will need to diversify and tap external sources of financing. The IFC investment will enhance the projects' visibility and credibility with potential international investors," it added. IFC will provide long term local currency financing at fixed interest rates through long term cross currency swaps.

The IFC was also anticipating that with increased handling capacity, the number of employees at GPPL would increase. "The increased traffic at the terminal is also expected to promote increased economic activity in the area surrounding the port," it added.

GPPL had signed a 30 year Concession Agreement with Gujarat Maritime Board (GMB) in 1998 to build, operate and transfer the Pipavav Port. AP Moller Maersk Group, a Danish conglomerate and world leader in container shipping and terminal operations, is the primary Sponsor of GPPL and owns a 43 per cent stake in the Company. The remaining issued shares of GPPL are widely held by institutional and individual investors. GPPL’s shares are listed on the BSE and NSE.