A change in government in Maharashtra has led the Union cabinet to tread cautiously while backing an ambitious ₹65,544.54 crore plan to build a deep-water port to be helmed by state-owned Jawaharlal Nehru Port Trust at Vadhavan in Palghar district.

That explains why the Cabinet was silent on the participation of Maharashtra Maritime Board (MMB), the State government agency tasked with developing ports.

In June 2015, JNPT had signed a memorandum of understanding (MoU) with MMB to develop Vadhavan Port as a Central government-owned port through a special purpose vehicle in which JNPT will hold 74 per cent stake with MMB holding the balance equity.

However, a government statement said after the cabinet meeting,“A Special Purpose Vehicle (SPV) will be formed with Jawaharlal Nehru Port Trust (JNPT) as the lead partner with equity participation equal to or more than 50 per cent to implement the project. The SPV will develop the port infrastructure including reclamation, construction of breakwater, besides establishing connectivity to the hinterland. All the business activities would be undertaken under PPP mode by private developers.”

PPP mode

Vadhavan will be set up as a corporate port under the Companies Act. It would be developed as a landlord port with the port company building the basic port infrastructure while berths, terminals and associated facilities will be constructed by private firms in public-private-partnership (PPP) mode.

Based on the MoU in 2015, a shareholders’ agreement was signed between JNPT and MMB and a special purpose company was registered two years ago. The Bharatiya Janata Party-led government was in power in Maharashtra when the Vadhavan port was first conceived in 2015. The BJP lost power in the wake of the 2019 polls.

“The Cabinet approval does not envisage like that — to build the new port as a joint venture between JNPT (74 per cent stake) and MMB (26 per cent equity),” a government official briefed on the plan said. The balance equity in the SPV (apart from that held by JNPT) can be offloaded to another state-owned port like Mumbai Port Trust or Deendayal Port Trust. These are points which have not been deliberated upon because different governments are working now. The political dispensation in Maharashtra is not the same as the one when the project was initiated,” the official said.

The equity participation of an agency of the Maharashtra government is critical for the smooth implementation of the project, particularly on securing environment and coastal regulation zone (CRZ) clearances.

The Dahanu Taluka Environment Protection Authority has raised objections to the Vadhavan project planned to handle some 254 million tonnes (mt) of cargo including 9.87 million twenty-foot equivalent units (TEUs). This Authority is recognised even by the supreme court as a statutory, green body to scrutinise and approve projects coming up in the ecologically sensitive Dahanu taluka area.

To overcome the opposition, the port will not be constructed on the land side but by reclaiming 567 hectares from sea, spread over four phases. But, this has not quelled concerns of the Dahanu green body nor of the farmers whose land will be acquired for the project.

“We will address these issues and will resolve the concerns raised by the environmental groups,” the official said without explaining further.

Due to delays in securing Union cabinet approval, the MMB had in early 2019 flirted with the idea of developing Vadhavan as a private port and not as a joint venture between India’s biggest container port and MMB.

The construction of breakwater and shore protection activities alone will cost about ₹5,206.70 crore.

There is a need for a deep draft port that will accommodate the largest container ships in the world and also cater to the spill over traffic from JNPT once its planned capacity of 10 million TEUs is fully utilised by 2025 with no scope for further expansion, the Cabinet said after the meeting.