The estimated project cost was pegged at Rs 800 crore and revised to Rs 1,055 crore
In a decade, the cost for deepening and widening of Mumbai’s harbour and port channels has shot up by 154% from Rs 800 crore to Rs 2,029 crore, and by the time the project is completed, there may be more price revisions.
The plan to deepen and widen Mumbai harbour channel and port channel (Phase II) for the benefit of Jawaharlal Nehru Port Trust (JNPT) and Mumbai Port Trust (MbPT) has now reached for a green nod and may take some more time before the work commences.
The estimated project cost was pegged at Rs 800 crore and revised to Rs 1,055 crore. Half a decade ago, the cost was estimated at Rs 1,571.60 crore, but now it has shot up to Rs 2,029 crore. There are also plans for developing an Emergency Anchorage, but the cost estimated for it is exorbitant at Rs 4,182 crore and will take three years for implementation.
“A few clearances are pending, among them are environmental nod, Public Investment Board (PIB),” said Neeraj Bansal, deputy chairman, JNPT. Once approval comes in from PIB, the next step will be to move it before Cabinet Committee of Economic Affairs.
Authorities are planning to float tenders in January 2017 so that bid can be awarded before March 31, 2017. “Process for clearances and bidding can go on simultaneously so that we save on time. Work is likely to commence after 2017 monsoon or last quarter of the calendar year 2017, by when it is expected that all related nods will be in place,” shared Bansal.
It will take at least two years for dredging operations to be through once the work takes off, this excludes maintenance dredging that will have to be done periodically.
The current draught is 14 metres. The plan is to deepen it to 15 metres as the existing container berths at JNPT are designed to cater to ships of 15-metre draught only. Channel’s width will be increased to 450 metres.
As it is mandatory to get a green nod before starting project work, the process for the same has begun. “Maharashtra Pollution Control Board (MPCB) will hold a public hearing on environmental grounds on January 23, 2017. The public hearing will be held within JNPT’s Township and will be conducted from the environmental angle, about the proposed project,” shared an MPCB official.
This isn’t the first time that the same project has been put up for environment nod. Back in March 2004, it had received environment clearance from Ministry of Environment and Forests, which was later extended for a period of five years starting from March 2009, but its validity expired in March 2014.
The latest Detailed Project Report (DPR) on the project reads, “Considering that infrastructure at JNPT will be limited to development of 4th container terminal, container traffic potential at JNPT would be 8.37 million twenty-foot equivalent units per annum (MTEUsPA) with the existing channel dimensions, which would increase to 10.05 MTEUsPA with proposed Phase II channel deepening.”
Once the project is accomplished, the total vessel traffic of JNPT and MbPT combined will increase from 4,769 in 2015-16 to 5,830 in 2029-30.
Among the 12 major ports of India, JNPT and MbPT together handle 22% of shipping traffic. Statistics with Indian Ports Association suggest that out of 5,81,344 vessels handled during the financial year 2015 at the dozen major ports, MbPT had 61,660 (10.60%) of them as compared to 63,802 (10.97%) by JNPT.
Three financial models have been analysed for the project, namely, public-private partnership (PPP), annuity model and cash contract. As per the calculations done under PPP model, the equity internal rate of return (IRR) will be 15.11%, thereby making it financially viable. Secondly, under the annuity model, JNPT will have to shell out Rs 655 crore to generate 14% IRR for the developer. “The total annuity payment by JNPT is Rs 18,995 crore and total gain to JNPT from revenue collection over 30 years is Rs 22,844 crore. Thus, the total net gain to JNPT over 30 years is Rs 3,849 crore,” mentions the DPR submitted in March 2016. If JNPT executes the third model, the capital cost will be Rs 2,029 crore and post-tax project IRR will be 13.78%. The last option has been recommended for the project implementation.
If the project is ready within the specified timeframe, the total economic benefit during 2015 to 2045 is estimated at Rs 15,186 crore, which is 7.5 times higher than project development cost of Rs 2,029 crore.
In 2007, a global bid was called but it wasn’t finalised as the Ministry of Shipping did not approve the quotation which was 25% above the reserve value.
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