Ports may raise market debt

With the finance ministry dithering over providing grant for the two dredging projects worth over Rs 1,000 crore in JawaharLal Nehru Port Trust (JNPT) and Cochin, the shipping ministry has suggested the option of using market borrowing to partly fund dredging.

"Market borrowing is an option that can be used by more well off ports. We, however, still want the government to adopt a general policy of completely supporting capital dredging while other options could be tried in exceptional cases" a shipping ministry official said.

The official added that market borrowing comes with associated costs like debt servicing and interest payments, which many ports may not be able to bear. He said apart from Cochin and JNPT, dredging proposals for other ports like Paradip were also in the offing.

The official said that though shipping ministry had been pushing for the government to fund the dredging completely, the finance ministry was divided over the issue. While a section of the officials concurred with the shipping ministry's view, there were others who were in favour of financing the project through private participation.

"To build a consensus we may go for a middle path where some financially well off ports could go for market borrowing to fund part or whole of the project," the official said. In case only a part of the project was being financed through internal resources, the government could chip in the rest.

He said the option to undertake the project through private participation was not a practical one.

Capital dredging, which is deepening of channels and the main harbour, is not an area that would attract private players. It not only required high investment, but also offered meagre returns on the investment turning the private players away.

Of the present lot of major ports, Jawahar Nehru Port has already raised around Rs 300 crore through market borrowing to pay the principal amount of the World Bank Loan taken to build the port in 1980s.

One of the dredging proposals awaiting finance ministry's approval are the Rs 600 crore project for deepenig the draft of the main harbour from 11 meters to 13.9 metres and that of the approach channel from 11.5 metres to 12.8 metres. The other proposal relates to dredging for International Container Transhipment Terminal Project at Vallarpadam at the cost of Rs 464 crore.