Yen loan delay to hurt JNPT plans

Written by Nikita Upadhyay | Nikita Upadhyay | Mumbai | Updated: Mar 31 2011, 08:54am hrs
It could still be a long wait for India's largest container terminal, Jawaharlal Nehru Port Trust (JNPT), to implement dredging plans. JNPT, which had earlier approached the Japan International Cooperation Agency (Jica) for a soft loan of R1,000 crore to fund its first phase of dredging, is now concerned that the agency will be unable to provide the funds in time, following the devastating earthquake and tsunami.

Due to crises in Japan, it's doubtful whether Jica will be able to respond to our need in time, in which case we will not be able to avail that loan as soon as we want, Luxman Radhakrishnan, chairman, JNPT, told FE.

Japanese yen loans are long-term low interest rate loans advanced to developing countries. Japanese companies' own demand for funding has soared since the March 11 earthquake and tsunami, reports said, with the country's top three banks, Sumitomo Mitsui Banking Corp, Mizuho Corporate Bank and Bank of Tokyo-Mitsubishi UFJ getting requests for new loans totalling 2.6 trillion yen ($32 billion) over two weeks.

JNPT wanted to undertake the dredging that will take its draft from currently 12 metre to 14.5 metre. The port will now have to initiate fresh talks with other agencies for the loan, delaying its dredging plans. The first phase of dredging will incur an investment of about R1,400 crore. This project has been approved by the board and also by the environment ministry. We have clearance from the planning commission also. What is pending is the FIPB nod, he added.

After the FIPB nod, JNPT will request for quotations which will look at qualification criteria of prospective bidders. The contract will be awarded by September and the work will start immediately.