Author: Sharmistha Mukherjee
Publication: Business-Standard.com
Date: January 5, 2010
URL: http://www.business-standard.com/india/news/shipping-ministry-to-double-cost-estimatessethusamudram-project/381694/
The Ministry of Shipping is nearly doubling
the initial cost estimates of the controversial Sethusamudram Ship Channel
Project, which aims to dredge a navigable channel through the Palk Strait
between India and Sri Lanka.
"Initially, the project was to be developed
at an estimated cost of Rs 2,400 crore. But we are revising the cost estimates,
part of which would be requested for immediately to clear dues pending to
the Dredging Corporation of India (DCI)," said a senior official in the
ministry.
The new estimates, which would soon be sent
for approval to the Public Investment Board, were likely to be revised further,
depending on the alignment suggested for dredging the channel in the Pachauri
Committee report, the official added.
Initially, the project had been sanctioned
at a cost of Rs 2,427 crore. The ambitious project was planned to be funded
on a debt-equity ratio of 1:1.5. However, because of uncertainties the project
is fraught with, the Sethusamudram Corporation Ltd has not been able to raise
loans.
Meanwhile, the Rs 971 crore - raised as equity
from the Centre and internal resources of major ports to benefit from the
project - have been utilised for coastal community development programmes
in Tamil Nadu, dredging activities and to fund the purchase of tugboats. Out
of this, about Rs 500 crore is pending from the corporation to DCI for dredging
work on the channel.
Currently, work on the channel has come to
a standstill due to unavailability of resources. Dredging work in the Adam's
Bridge area, too, is temporarily suspended based on an order passed by the
Supreme Court in September 2007.
The Supreme Court had suggested that an alternative
alignment between Dhanushkodi and Lands End in Rameshwaram Island be examined
for creating the channel.
Accordingly, the government constituted an
expert committee under the chairmanship of R K Pachauri in July 2008 to examine
the feasibility of the alternative alignment keeping in view the technical
aspects, cost benefit analysis, socio-cultural and environmental impact and
law and order matters.
The Sethusamudram project plans to provide
ships sailing between the east and west coasts of the country with a continuous
navigable sea-route through India's territorial waters, instead of having
to circumvent Sri Lanka.
The project is facing opposition on environmental
grounds. There is fear that the channel may result in tsunami waves hitting
south Kerala more fiercely. Concerns have also been raised that the present
channel would destroy marine life and adversely affect the trade in shells,
which has a turnover of over Rs 150 crore per annum.
The dredging of Ram Sethu, a mythological
bridge built by Lord Rama in the Palk Strait, has made the BJP oppose the
project.
However, G K Vasan, on assuming charge at
the shipping ministry last year, had announced that the Congress-led United
Progressive Alliance government would complete the Sethusamudram Project as
it is beneficial for the country and for the state of Tamil Nadu.
The National Institute of Oceanography (NIO)
has been entrusted to conduct an environmental impact assessment of the alternative
alignment, proposed between Dhanushkodi and Lands End, Rameshwaram Island.
The study will be completed in 18 months. However, the Supreme Court, in a
hearing in December 2009, directed the NIO to table its findings over a three-month
period by the end of February.
The Pachauri committee had held five meetings
to date, the last being held on November 10 last year.
