CHENNAI: : Prime Minister Manmohan Singh is likely to lay the foundation for the Sethusamudram project in the first week of July, kicking off dredging operations to create a navigable channel around the peninsula.

Ramanathapuram, where most of the work will be undertaken, Tuticorin, where the concept of the Channel was conceived, and Madurai for its central location are being considered for hosting the function. Earlier, it was planned for the third week of this month.

The inaugural function is to be held in the next few weeks, said N.K. Raghupathy, Chairman and Managing Director, Sethusamudram Corporation Limited (SCL). He expected it to be conducted in the first week of July. While the date and venue would be finalised shortly by the Centre, the Tuticorin Port Trust (TPT), nodal agency for the project, was prepared to hold the function at a short notice.

Besides making arrangements for the function, the agencies involved in the implementation of the Rs.2,427.40-crore project were working on other measures, including the one to access the "tremendous reservoir of knowledge" available with the Suez Canal Authority, he told presspersons here on Wednesday.

A team comprising Mr. Raghupathy, who is also TPT Chairman, and the Joint Secretary of the Union Ministry of Shipping, would leave for Egypt within a couple of days to finalise the draft of the memorandum of understanding with the Authority.

Before his visit, Mr. Raghupathy would chair a pre-bid meeting with leading dredging firms, including Jan De Nul, Dredging International, Royal Boskalis Westminster and the Dredging Corporation of India (DCI). The DCI would be awarded a portion of the work on a nomination basis, but would be paid on a par with the rates finalised in the tender for the rest of the contract.

On raising finance for the project, he said the Centre's guarantee for the Rs.1,456.40-crore debt component, half of which would be in the foreign exchange, was attracting a host of financial institutions, including HDFC, HUDCO, ICICI, IDBI and UTI. "Financial institutions have informed us that achieving financial closure is a foregone conclusion," he said. SCL's emphasis was on optimising the interest. The Corporation appointed UTI Bank as "arranger for the finance."

The Centre, the major ports on the eastern coast, the DCI and the Shipping Corporation would contribute Rs.745 crores to the equity of the project, while Rs.22 crore would be raised from the market.

On the environmental aspects, he said all the concerns, including those raised by Sri Lanka, had been addressed.

The Union Ministry of Environment and Forests granted approval and laid down stringent conditions.

Asked whether the Tamil Nadu Pollution Control Board had cleared the project, Mr. Raghupathy said he was unaware of the details, as the issue was between the Board and the Ministry.

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