THIRUVANANTHAPURAM: The State Government has sought political clearance from the Centre to allay national security concerns over the involvement of Chinese firms in the project to develop an international container transhipment terminal at Vizhinjam.

A consortium, including the Mumbai-based Zoom Developers and two Chinese firms, the Kaidi Electric Company and the China Harbour Engineering Company, has bagged the Rs.4,200-crore bid for the Vizhinjam project.

A highly-placed official says that the Government has referred the issue to the Centre because of the concerns raised by various Ministries and intelligence agencies over the increasing participation of foreign companies in India's infrastructure projects. A formal proposal was sent to the Shipping Ministry last month.

The official points out that the same concerns had recently forced the Maharashtra Government to extend the bidding process for the construction of an offshore container terminal in Mumbai. The Hong Kong-based Hutchison Port Holding was one of the major bidders for the project. The company is also bidding for a second container terminal at the Chennai port.

With more foreign firms lining up to bid for infrastructure projects in India, the issue of security clearance has become a thorny problem for the Government. Earlier this month, the Ministry of External Affairs reversed its position and recommended a go-ahead to the Hutchison Port Holdings' bid for the Mumbai project. The MEA also asked the Cabinet Committee on Security to spell out institutional arrangements to address issues relating to the participation of foreign companies in domestic infrastructure development.

The MEA's position was later endorsed by the Department of Shipping and the Defence Ministry. Officials say the change in the MEA's position is a positive signal for the Vizhinjam project. They say that the final nod from the Home Ministry is likely to be issued in a week's time.

CEO of Vizhinjam Seaport International Ltd. Dr.Jayakumar, who was in New Delhi last week as part of a high-level official delegation, says that the project is likely to clear the final hurdle soon. The Prime Minister Manmohan Singh is expected to inaugurate the project by the end of the month.

Meanwhile, the Government is planning a study to identify the spinoff benefits from the Vizhinjam project. Key officials said the study would explore the possibility of setting up a special economic zone, logistics corridor and a free trade warehousing zone. They said the entire southern region of Kerala as well as the bordering districts in Tamil Nadu were expected to benefit from the project.

The inherent advantage of a 24-metre draft endows Vizhinjam with the potential for development as a mega container transhipment hub capable of handling the giant post-Panamax class of carrier ships. The project is expected to save valuable foreign exchange to the tune of Rs.1,000 crores every year.

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