Maharashtra Maritime Board to pick equity in JNPT-helmed Vadhavan Port

The Maharashtra Maritime Board (MMB) said it will take an equity stake of at least 26 per cent in a new 65,545 crore port to be built by the Central government with Jawaharlal Nehru Port Trust (JNPT) as the lead partner, putting to rest doubts over the State government’s participation in the ambitious project.

On February 5, the Union Cabinet accorded ‘in-principle’ approval for the new port to be built by a special purpose vehicle (SPV) formed under the Companies Act, in which state-owned JNPT — India’s biggest container gateway — will hold an equity stake equal to or more than 50 per cent.

The Cabinet, though, was silent on MMB’s participation in the project despite a June 2015 memorandum of understanding (MoU) signed between JNPT and MMB to develop Vadhavan Port as a 74:26 joint venture between the two sides.

But, with the NDA government soft-pedalling the process to secure Cabinet approval for the project, MMB had sought JNPT’s views in 2018 on building the port as a private one outside the ambit of the Central government.

Following the Cabinet nod, the Shipping Ministry moved swiftly to notify Vadhavan as a major port, foreclosing the possibility of the new port being developed by the Maharashtra government as a private port. This forced MMB — the State government agency tasked with developing ports in Maharashtra — to change its stand on participating in the project, government sources said.

“It has already been notified as a major port. Once it is notified as a major port, MMB doesn’t have the jurisdiction to develop Vadhavan as a private port outside the control of the Central government,” a Shipping Ministry official said.

“MMB is very much in the project; that is very clear,” a Maharashtra government official said. This issue was discussed at a meeting called by Shipping Secretary Gopal Krishna a few days ago, he said.

That story (to develop it as a private port), is over now, the official said. “As far as we are concerned, the MoU is in place and the Cabinet was informed about it. We have to take a call on the equity stake we will hold because it will depend on the cost of the project. All other details/modalities are yet to be worked out,” he added.

“We would like to have MMB as a partner because the State government must be a part of this project,” Sanjay Sethi, JNPT Chairman, said on February 27.

Sethi said that JNPT was open to having other PSUs as partners in the project. “The Cabinet nod says at least a 51 per cent majority stake will be with JNPT. Basically, it means that we remain the landlord and if required we will put in more equity, but we have kept it open,” he added.

Imperative for west coast

The ever-increasing size of container ships makes it imperative that a deep draft container port is developed on India’s Western Coast, the ministry official said.

“Vadhavan port has a natural draft of about 20 metres close to the shore, making it possible for it to handle bigger vessels. Development of Vadhavan port will enable call of container vessels of 16,000-25,000 TEUs capacity, giving advantages of economies of scale and reducing logistics cost,” he added.

The SPV will develop port infrastructure, including reclamation, construction of breakwater, rail and road connectivity to the hinterland. All the cargo handling activities will be outsourced to specialists through the PPP route.