Rs 76,000-cr Vadhavan Port project in Maharashtra gets Cabinet approval

The Union Cabinet, in its second meeting under the Narendra Modi government’s third term, on Wednesday approved the Rs 76,220 crore Vadhavan Port project in Maharashtra after months of deliberations.

This will be one of the largest port projects in India and is expected to serve as a gateway port for the upcoming India-Middle East-Europe Corridor (IMEC) and International North-South Transportation Corridor (INSTC).

The Cabinet also initiated the plan for the country’s first set of offshore wind power projects by approving a viability gap funding (VGF) scheme of Rs 7,453 crore. Other decisions include increasing the minimum support price for kharif crops in the range of 5 to 12.7 per cent.

“The Cabinet decision on developing a major port at Vadhavan in Maharashtra will boost economic progress and also create employment opportunities on a large scale,” Modi said in a post on X.

The port will be constructed by Vadhavan Port Project Limited (VPPL), a special purpose vehicle formed by the Jawaharlal Nehru Port Authority (JNPA) and Maharashtra Maritime Board (MMB) with a shareholding of 74 per cent and 26 per cent, respectively.

Vadhavan Port will be developed as an all-weather greenfield deep draft major port.

The project’s cost will include the development of core infrastructure, terminals, and other commercial infrastructure in a public-private partnership (PPP) mode, a government statement said.

To establish connectivity to the upcoming port, the Cabinet also approved the establishment of road connectivity between the port and national highways by the Ministry of Road Transport & Highways and rail linkage to the existing rail network and the upcoming Dedicated Rail Freight Corridor by the Ministry of Railways.

“The world-class maritime terminal facilities will promote PPP and leverage efficiencies and modern technologies to create state-of-the-art terminals capable of handling mainline mega vessels plying on international shipping lines between the Far East, Europe, the West Asia, Africa, and the Americas. Vadhavan Port, on completion, will be one of the top 10 ports in the world,” the Cabinet said in a press release.

According to the port’s proposal, the entire project will see the government invest Rs 38,000 crore, with a broadly equal amount sought from private-sector players who win the bids for the nine terminals.

The current cost of the project is a Rs 11,000 crore increase from 2020 when it first received in-principle approval from the Union Cabinet.

Earlier, the project encountered delays due to environmental concerns. The Centre has planned initiatives to address the concerns of local communities, which had been protesting against the clearance granted by the Dahanu Taluka Environmental Protection Authority in August 2023, citing the potential for major environmental damage and loss of livelihood for local communities.

Offshore wind projects get wings

The Union Cabinet approved a viability gap funding (VGF) of Rs 7,453 crore to initiate the country's first set of offshore wind power projects.

The VGF amount for offshore wind power projects includes an outlay of Rs 6,853 crore for the installation and commissioning of 1 gigawatt (Gw) of offshore wind energy projects (500 Mw each off the coast of Gujarat and Tamil Nadu), and a grant of Rs 600 crore for the upgradation of two ports to meet logistics requirements for offshore wind energy projects.

“The VGF support from the government will reduce the cost of power from offshore wind projects and make them viable for purchase by power distribution utilities. While the projects will be established by private developers selected through a transparent bidding process, the power evacuation infrastructure, including the offshore substations, will be constructed by Power Grid Corporation of India Ltd,” a government statement said.

Under the scheme, two ports in the country will be supported by the Ministry of Ports, Shipping & Waterways to meet the requirements of offshore wind development.

Last September, the MNRE issued a tender for the development of offshore wind projects off the coast of Tamil Nadu with a cumulative capacity of 7 Gw. The high cost of offshore projects was a deterrent for investors, along with a lack of clarity on transmission infrastructure.