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Sagarmala proj faces resource mobilisation challenges: Study

Press Trust of India  |  Mumbai 

The government's Rs 8 lakh crore shipping and ports initiative, Sagarmala, faces challenges like timely investment mobilisation and budgetary support, according to domestic rating agency

It, however, said from a long-term perspective, the shipping and ports sector should benefit from the ambitious programme aimed at expanding the coastal and inland waterways.

"Challenges would remain in terms of mobilisation of the investments in a timely manner, allocation and availability of adequate budgetary support," said in a note on the shipping sector.

It added that creating a conducive business environment and tangible incentives for the private players is also a challenge.

The Sagarmala programme was launched under the port-led growth model and aims to invest Rs 8 lakh crore to create new mega-ports, modernise existing facilities and also have special economic zones adjoining the ports, to create over 1.5 lakh new jobs.

said the domestic shipping companies have been struggling for nearly a decade as most of them had carried out sizable acquisitions 5-6 years back anticipating an uptick in the charter rates which has not fully materialised.

This has resulted in subdued return indicators and debt coverage metrics, it added.

"The rise in crude prices is further aggravating the trouble for the shipping lines, as the bunkering costs have gone up by 40-50 per cent in the last one year," it said.

The agency said the dry bulk segment is a bright spot in an otherwise struggling industry because of lower order-booking and improvement in global economy which have upped charter rates in the last two years.

However, its assistant vice president and co-head for corporate ratings said the agency is "cautious" on the dry bulk segment, saying the improvement in outlook and increase in prices of second-hand vessels could revive the appetite for new buildings.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, May 22 2018. 18:35 IST