Maharashtra: PMO's Proposal Delays Vadhavan Port Approval Amidst Lok Sabha Polls

The Vadhavan mega port project in Maharashtra faces a new challenge as the Prime Minister’s Office (PMO) suggests adopting the hybrid-annuity model (HAM) for execution.

This recommendation arrives amidst final investment proposals, delaying anticipated Cabinet approval before the Lok Sabha polls.

The Rs 76,220-crore container port project, a joint venture between Jawaharlal Nehru Port Authority and Maharashtra Maritime Board, initially planned under the landlord model, now awaits Cabinet clearance due to the PMO's late suggestion.

If approved, this would mark the first implementation of the HAM model in a port project, necessitating significant restructuring. Port industry experts express skepticism about its suitability due to challenges in cargo handling and revenue collection.

The Vadhavan Port aims to overcome natural limitations faced by other Indian ports. It includes provisions for container terminals, liquid bulk berths, and rail terminals, with core infrastructure financed by Vadhvan Port Project Ltd and government entities.

However, uncertainty looms over cargo terminal allocation under HAM, raising questions about operational responsibilities. As debates intensify, the fate of the Vadhavan Port project hangs in the balance, awaiting a decision on the proposed financing model, as per Economic Times report.

The Union Cabinet, chaired by Prime Minister Narendra Modi, in February 2020, had approved setting up Vadhavan Port under the Sagarmala Programme.

Situated in the environmentally sensitive Dahanu taluka within Maharashtra’s Palghar district, Vadhavan Port boasts a natural draft of approximately 20 metres near the shore.

This feature makes it well-suited for accommodating larger container vessels ranging from 16,000 to 25,000 twenty-foot equivalent units (TEUs), offering the benefits of economies of scale and contributing to the reduction of logistics costs.

The Jawaharlal Nehru Port Trust (JNPT) and Mundra, the two largest container handling ports in India, can handle only mid-size container ships as they have drafts of 15 metres and 16 metres, respectively. However, in comparison, the world's largest container ports require deeper drafts of 18-20 metres.

As container ships continue to increase in size, it becomes essential to develop a deep draft container port on the west coast of India to accommodate these larger vessels. The proposed port in Maharashtra is anticipated to have a capacity of over 23 million TEUs by 2040, positioning India among the top 10 container ports globally.

Additionally, the construction of the greenfield port at Vadhavan is crucial to manage overflow traffic due to limitations on expansion at Nhava Sheva, where JNPT is situated.