New Delhi: India's major ports and state-run shipping entities may take Rs 50,000 crore loan in US dollars at a low interest rate to augment infrastructure, Union Minister Nitin Gadkari said today.
A pact for External commercial borrowings (ECB) by Jawaharlal Nehru Port (JNPT) with SBI and Singapore's DBS, for USD 400 million (around Rs 2,600 crore) loan, has paved way for other major ports besides Shipping Corporation, Dredging Corporation and Cochin Shipyard to take the same route, Shipping and Road Transport and Highways Minister said.
"ECB in ports will increase capital in infrastructure sector. JNPT has paved way for our ports and shipping entities to take loans in dollar term at a very low interest rate which in turn would enhance the viability of projects," the Minister said at a function here for exchange of documents by bankers and JNPT officials for ECB of USD 400 million.
"We can take loans of Rs 50,000 crore in US dollars," Gadkari said. Jawaharlal Nehru Port (JNPT) has entered into an agreement with State Bank of India (SBI) and Development Bank of Singapore (DBS) for a loan of USD 400 Million.
Gadkari said the rate of ECB loan is only 2.025 per cent and with Libor it comes to about 3.15 per cent which is cheaper than any other Indian currency loan. The funding by JNPT is the first-of-its-kind for major port and it opens up one more avenue for major and government ports to raise funds by accessing international markets for their requirements, he said.
He said the loan would be used for augmenting JNPT infrastructure that include a 45 km 6/8 lane road which will be tolled and added JNPT may repay it in 5-6 years as it has 45 lakh containers which are going to be increased to 1 crore. "Loans in dollar term in 3 per cent interest would reduce our project costs as there will be a saving of interest of 8 per cent.
Cost of our construction will reduce and economic viability of projects will increase. We are planning to use the financial strength of our ports to develop inland waterways," Gadkari said.
Gadkari said ECB of USD 400 million by JNPT will be used to improve the infrastructure required for doubling its existing capacity to 9.85 million TEUs annually.
The ECB comprising USD 300 million from SBI and USD 100 million from DBS will be primarily utilised by JNPT, which has US dollar denominated foreign currency earnings that can be leveraged for a low cost foreign currency borrowing, for expansion of existing roads network.
"Borrowing by JNPT is for Door-to-Door tenor of 7.5 years. However, lending by JNPT to MJPRCL (Mumbai JNPT Port Road Company Limited) for 45 Km 6-8 lane road is for 16 years (two years construction and 14 years repayment)," JNPT Chairman Anil Diggikar said The project will be developed by MJPRCL, a joint venture company of NHAI, JNPT and CIDCO at a cost of Rs 2,895 crore. JNPT is going to double its capacity in the next seven years and the road project would boost EXIM trade....