Vadhvan Port Project: JNPA Adopts Modified Hybrid Annuity Model For Rs 20,647 Crore Dredging And Reclamation Works

The Jawaharlal Nehru Port Authority (JNPA) is set to adopt a revised Hybrid Annuity Model (HAM) payment structure, tailored from the model used by the National Highways Authority of India (NHAI), for the Rs 20,647-crore dredging, offshore reclamation, and shore protection works at the upcoming Vadhvan Port.

This customised PPP approach aims to reduce JNPA and Maharashtra Maritime Board’s borrowing needs and entice private bidders.

The Vadhvan Port, to be developed by Vadhvan Port Project Ltd—a joint venture between JNPA (74 per cent stake) and the Maharashtra Maritime Board (26 per cent)—will be built in two phases under the landlord model.

The mega-port will have nine container terminals, each 1,000 m long. It will also have four multipurpose berths, including a coastal berth, four liquid cargo berths, a berth for roll-on, roll-off, or Ro-Ro ships, and a Coast Guard berth.

However, as the port sector lacks an established HAM framework, JNPA is adapting the highway HAM model, making modifications based on contractors' feedback during an expression of interest (EoI) process.

Instead of the NHAI’s 40:60 payment model, JNPA plans to disburse 60 per cent of the project cost within the three-year construction period, followed by the remaining 40 per cent over a 5-7 year maintenance period.

“This aligns payments with the three-year construction phase while also meeting contractor requirements for a shorter concession period,” an official explained, adding that maintenance dredging will be excluded from the scope due to uncertainty over future dredging needs.

JNPA’s adjustment to a 60:40 model addresses contractors' requests for a higher initial payout and shorter payment timelines, reducing the risk period from 15 to 8-10 years.

According to Economic Times report, the modified HAM model also alleviates JNPA’s immediate funding needs, as 60 per cent of the Rs 20,647 crore would be required only during the three-year construction phase, instead of the entire amount in one go under the traditional EPC model. This phased payment approach allows JNPA to leverage its existing funds while easing the financial burden.

Further, JNPA will hire separate contractors for maintenance dredging as needed, an approach that offers flexibility and avoids added costs for private partners. Chairman Unmesh Wagh emphasised that Vadhvan Port Project Ltd., as a financially sound JNPA subsidiary, is committed to honoring contractor payments.

The finalised HAM model will soon be presented to the Ministry of Ports, Shipping, and Waterways and then to the PPP Appraisal Committee (PPPAC) for approval, with tenders expected to follow.

Upon completion in 2030, Vadhavan Port will handle 23.2 million twenty-foot equivalent units (TEUs) a year. The port is envisaged to have a cumulative cargo handling capacity of 298 million tonnes per annum (MTPA).

The proposed port is also Integral to India’s strategic initiatives such as the India Middle East Europe Economic Corridor (IMEEC) and the International North-South Transportation Corridor (INSTC). Vadhavan is expected to emerge as a hub port in the Arabian Sea.