Port operator Gujarat Pipapav Port Ltd (GPPL) may get a loan of up to $170 million from International Finance Corporation (IFC), the private sector investment arm of the World Bank.
IFC may lend up to $60 million and also arrange for syndicated B loan of up to $110 million for GPPL, out of the total project cost of approximately $303 million , which involves the expansion of the existing container and bulk cargo handling facilities of the company in Pipapav district of Gujarat.
“The project is expected to expand existing port infrastructure in container & bulk handling capacity,’’ IFC said in a statement. The project will double the container and bulk handling capacity to about 1.5 million TEUs (Twenty-foot Equivalent Unit) and to about 10 MMTPA(Million Metric Tonnes Per Annum), respectively.
With this increased capacity, the company will be able to better serve shipping companies, which are currently facing capacity constraints. This will also reduce costs for shipping lines and consumers by handling larger vessels, the statement said.
The project in includes construction of a second 348 metre container Berth 5, contiguous with the existing Berth 4, the 110 metre extension of bulk Berth 1 and dredging at Berth 5 as well as Berths 1-3 to achieve a draft of 14.5 m.
In addition, the container yard would be expanded. The company would invest the money in purchase and installation of additional container and bulk cargo handling equipment. Along with it, it expects to upgrade the existing 10 km road connecting the Port to the national highway.
IFC will provide long term local currency financing at fixed interest rates through long term cross currency swaps. This type of funding is not available from the local banks in India that only provide floating rate loans.
Noting that the company has not worked with international banks till date, a successful syndication through the proposed bank loan will expose the company to a pool of international banks, which will expand GPPL’s funding sources and options for the future, said IFC.
Recently, the company raised about $37 million through institutional investors to fund its expansion plans.
The project will increase revenues for the government by making higher royalty payments as well as paying higher corporate income taxes and generate more employment and increased economic activity.
Port Pipavav is managed and operated by APM Terminals, the ports and terminals company of the maritime giant, A.P. Moller-Maersk Group. APM Terminals is one of the largest container terminal operators in the world and offers the global shipping community an integrated Global Terminal Network of 60 ports and 132 inland facilities in 63 countries.
Gujarat Pipavav is backed by private equity investors IL&FS PE and Jacob Ballas.
(Edited by Prem Udayabhanu)