Vadhva.n Port Land Reclamation to Be Done in Two Phases; Board Approves Proposal

In a bid to attract more bidders for the proposed Vadhvan port project in Maharashtra, the board of Vadhvan Port Project Ltd (VPPL) on Thursday approved revisions to the Hybrid Annuity Model (HAM), which has traditionally been used for highway infrastructure projects. The changes, aimed at optimizing the payment structure and period, are designed to make the model more suitable for the port sector.

Unmesh Sharad Wagh, Chairman of the Jawaharlal Nehru Port Authority (JNPA), explained that these adjustments were necessary to encourage a larger pool of bidders, ensuring better price discovery. VPPL, a special purpose vehicle formed by JNPA and Maharashtra Maritime Board (MMB), will oversee the project, with JNPA holding 74% and MMB 26%.

The revised HAM model, which will now be sent for approval to the Union Ministry of Ports, Shipping, and Waterways and then to the Public Private Partnership Appraisal Committee (PPPAC), will pave the way for the bidding process to begin once approved. The project includes reclaiming 1,227 hectares of land for the port at an estimated cost of ₹22,000 crore, with dredging, reclamation, and offshore protection bund construction forming the key components.

The reclamation will be done in two phases: Phase one will reclaim 850 hectares within three years, and Phase two will cover an additional 350 hectares. The entire construction period is set for five years, followed by a 15-year concession period. As part of the payment structure, 60% of the reclamation cost for the first 850 hectares will be paid within the first three years, and 60% of the cost for the next 350 hectares will be paid within two years. The remaining costs will be paid over the following 10 years.

The changes to the model were influenced by feedback from more than 10 companies that participated in an Expression of Interest (EOI) for the project, including Adani Ports, DP World, Royal Boskalis, and others. The revisions aim to mitigate risks for bidders by excluding the uncertain costs of maintenance dredging.

In terms of financing, both Power Finance Corporation (PFC) and REC Ltd have committed to funding the project, with JICA and the World Bank also expressing interest. JNPA plans to contribute ₹7,000 crore in equity, while the Government of Maharashtra is expected to add ₹3,000 crore.

HBL