In order to attract maximum number of bidders for the proposed Vadhvan port project in Maharashtra, the board of Vadhvan Port Project Ltd (VPPL) on Thursday approved the proposed tweaks to the Hybrid Annuity Model (HAM)—a public-private partnership model—and decided to reclaim 1200-odd hectares of land needed for the port in two parts.

The board members of VPPL met and decided to tweak the Hybrid Annuity Model which was first introduced to revive investments in India’s highway infrastructure sector in 2016. The approved tweaks are related to payment structure and payment period. 

“The Hybrid Annuity Model was never in vogue in the port sector. It was largely used for highway construction. So we are tweaking this model to suit our requirements. We want a larger number of players to participate in the bid to enable better price discovery,” Unmesh Sharad Wagh, Chairman, Jawaharlal Nehru Port Authority (JNPA), told businessline. For the implementation of the port project, a special purpose vehicle, VPPL, has been formed by JNPA and Maharashtra Maritime Board (MMB) with a shareholding of 74 per cent and 26 per cent, respectively. 

These tweaks made to the HAM will be sent to the Union Ministry of Ports, Shipping and Waterways and later forwarded to the Public Private Partnership Appraisal Committee (PPPAC) for the necessary approval. “Once the PPPAC approves, we will immediately float the bids for the project,” said Wagh. VPPL plans to reclaim 1,227 hectares of land for the port and construction of an offshore protection bund at an estimated cost of ₹22,000 crore. The project will involve carrying out dredging of the approach channel, harbour basin, dredging of material for filling and reclamation of a total offshore area and maintenance of the developed area.

As per the decision of VPPL board, the land reclamation will be made in two parts. In Phase-one, 850 hectares will be reclaimed in three years and in Phase-two an additional 350 hectares will be reclaimed. The total construction period will span five years and the total concession period will be of 15 years which will include the construction period of five years. As far as payment to the private entity participating in the reclamation is concerned, 60 per cent of the cost of reclaiming 850 hectares will be paid within the first three years, while 60 per cent of the cost of reclaiming 350 hectares will be paid in next two years. The remaining amount will be paid within the next 10 years.

These tweaks were incorporated after 10-odd entities participated in an EOI floated for the project by JNPA and shared inputs. The companies who participated in EOI include Adani Ports and Special Economic Zone (APSEZ), DP World, Royal Boskalis, Van Oord Dredging and Marine Contractors, Jan De Nul Dredging, among others.

“We have not included the cost of maintenance dredging. Nobody is sure what the dredging footprint will be for the port; This will minimise the risk of the bidders,” said Wagh. These changes in the model are expected to not only entice bidders but also minimise the need of JNPA and Maharashtra Maritime Board’s (MMB) need to borrow funds from the market.

Both Power Finance Corporation (PFC) and REC Ltd have already agreed to fund the project. “Even JICA and the World Bank have expressed interest to fund the project. We are not sure about the quantum of funds that will be needed. The bid will decide whether we require funds,” the chairman said, adding that JNPA will pump in ₹7,000 crore as equity in the projects, while the Government of Maharashtra is expected to add another ₹3,000 crore for the project.

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