Push sought for greenfield SEZ projects

Though preliminary discussions have already taken place, the ministry is convening a meeting of top banks and financial institutions to push for the financial closure of these SEZs. None of the ones cleared by the government are anywhere near achieving financial closure.

A total investment of over Rs 50,000 crore has been proposed in these zones.

The only SEZ that had come close to achieving financial closure was Positra, promoted by Sea King Infrastructure, in Gujarat.

The project has, however, been put on the backburner due to the delay on the part of the state government in sanctioning land.

A large part of the loan, both domestic and foreign currency debt, was proposed to be raised through the Industrial Development Bank of India (IDBI).

Commerce ministry officials said S Narayan, the economic adviser to the PMO, had already held discussions with representatives from the banks and financial institutions.

In the absence of financial closure, some promoters have expressed apprehensions that the proposed zones will meet the same fate as private sector power projects.

Banks and financial institutions, on their part, maintain that they are wary of lending to SEZ developers as they do not have the expertise for handling such long-gestation projects.

Also, they feel that the areas where the SEZs have been set up have not been tested in terms of their revenue generation capacity.

The officials said they had held discussions with IDBI and ICICI Bank for the financial closure of the proposed Maha Mumbai and Navi Mumbai SEZs as the lenders were afraid that the proximity between the two might make them economically unviable.

The officials are now pushing for a separate appraisal mechanism for SEZ projects. They are also looking at a dedicated team focused on financing these projects as part of the overall government strategy to improve infrastructure in the country.

Apart from IDBI and ICICI Bank, SEZ developers had in the past approached the State Bank of India, Housing Development Finance Corporation, Small Industries Development Bank of India and Infrastructure Development and Finance Company to raise debt.

SEZ facts

None of the SEZs cleared by the government are anywhere near achieving financial closure

A total investment of over Rs 50,000 crore has been proposed in these zones

The only SEZ that had come close to achieving financial closure was Positra, promoted by Sea King Infrastructure, in Gujarat. The project has, however, been shelved

The commerce ministry is likely to form a team that will focus solely on the funding of SEZs

Lenders to the proposed Maha Mumbai and Navi Mumbai SEZs are doubtful of the economic viability of the projects