JNPT inks pact with SBI, DBS for $400 million loan

The Jawaharlal Nehru Port Trust ( JNPT) has signed an agreement with State Bank of India and Development Bank of Singapore for External Commercial Borrowing (ECB) to the tune of $400 Million.

Funds will be used to double its existing capacity to 9.85 Million TEUs annually.

JNPT has dollar denominated foreign currency earnings which has been leveraged to raise low cost foreign currency borrowing.

The ECB of $400 Million ($300 Million from the SBI and $100 Million from DBS) will be primarily utilised by JNPT for expanding the network of roads that connect to its port projects.

The existing road network for evacuation of traffic is currently operated at a capacity utilisation of 100%, and the expansion is needed for quicker and more efficient evacuation of traffic.

Speaking on the occasion, road transport and highways minister Nitin Gadkari said that JNPT is the first major port in the country to have taken loans in dollars. This was possible because ports have a natural hedge in foreign currency earnings.

He also said that the rate of the ECB loan of 2.025% plus Libor (approx 3.15%) is cheaper than Indian currency loan.

He said the funding by JNPT is the first of its kind for major port and it opens up one more avenue for major and government ports to raise funds by accessing international markets for their requirements.

Borrowing by JNPT is for Door-to- Door tenor of 7.5 years.