The Hindu : Tamil Nadu News : `Reduction in distance will save fuel, time'

Online edition of India's National Newspaper
Tuesday, Oct 26, 2004

Tamil Nadu

Tamil Nadu

`Reduction in distance will save fuel, time'

By N. Ravi Kumar

CHENNAI, OCT. 25. The Sethusamudram project promises several benefits to Tamil Nadu such as development of minor ports, fisheries harbour and coastal trade.

The provision of a navigable channel for cargo ships to sail round the peninsula without going round Sri Lanka, could spur the creation of a transhipment port for containers at Colachel, N.K. Raghupathy, TPT Chairman, said.

The Tuticorin Port Trust (TPT) — nodal agency for the project — was keen on assisting in the development of such a facility at Colachel. "We have communicated to the State Government that we do not mind participating in the development," Mr. Raghupathy said.

While Colachel could be a natural choice, given its proximity to the international maritime route and natural depth within a short distance, there were other issues to be addressed.

The success of a transhipment hub depended on a good mix of local and international cargo — the former appeared remote now, as Colachel did not have a hinterland.

Apart from lack of infrastructure, it was a horticulture land with a dam in the neighbourhood. But these problems would not be insurmountable once the channel was created, Mr. Raghupathy told The Hindu here recently.

Expressing confidence about the economic viability of the project — the cumulative surplus would be Rs. 3,138 crores in the 25th year of operation — he said the economic benefits of the channel for the country far outweighed other advantages.

"The reduction in the navigable distance will mean savings for the ships in terms of fuel and time."

Equity contribution

The Sethusamudram Corporation Limited, a special purpose vehicle established for the project, would have an equity contribution of Rs.30 crores each from the Chennai, Ennore, Paradeep and Visakhapatnam ports and the Dredging Corporation of India; Rs.50 crores each from the TPT and the Shipping Corporation of India (SCI).

Apart from contributing directly to the total equity of Rs. 800 crores, the Centre would provide guarantee for the debts raised by the Corporation.

The internal rate of return for the Corporation was estimated at 10 per cent.

Noting that other available options included public issue and private placement of shares, Mr. Raghupathy said, "Several shipping companies have evinced interest."

For the TPT, enhanced security — the channel would facilitate easier and faster movement of Indian Navy ships — could be a key benefit.

He was hopeful of getting environmental clearance from the Tamil Nadu Pollution Control Board by the next month-end. "The actual field work is planned in March, April next."

The SCI "will be a major user of the channel," he said, pointing out that the canal authority, in the initial years, would offer competitive prices to shipping companies.

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