The Hindu Business Line : Two projects, one hope

LAST week saw announcements on two infrastructure projects that augur well for Kerala. The first related to the imminent clearance from the Union Government for the International Container Trans-shipment Terminal of the Cochin Port Trust (CPT) at Vallarpadam. The second was the declaration by the Cochin International Airport Ltd (CIAL) of a net profit of Rs 22.11 crore last fiscal, against Rs 12.54 crore in 2002-03, which allowed the company, which operates the airport at Nedumbassery, to declare a dividend of eight per cent.

Both these projects are centred around Kochi, the commercial capital of Kerala, and that in itself should be reason for good cheer, as it swings the spotlight back to infrastructure, which has always been the State's prized - though underutilised and often neglected - industrial asset. A 2003 study by the Confederation of Indian Industries ranked Kerala fourth in the rate of infrastructure penetration, behind Maharashtra, Tamil Nadu and Punjab, and ahead of Karnataka.

Adding to the general aura of optimism was the announcement by the Chief Minister, Mr Oommen Chandy, who is also Chairman of CIAL, after the 10th Annual General Meeting (AGM) last Friday, that projects of development had to be handled with immediacy. "We want result-oriented development.... we want quick results," he added.

Addressing the AGM, Mr Chandy described CIAL as the biggest milestone in Kerala's development. In the last financial year, the airport registered a net profit of Rs 21.11 crore on a turnover of Rs 85.26 crore, he said. The operating margin grew by around 60 per cent over the previous year.

CIAL has decided not to give any equity stake to its principal financier, the Housing and Urban Development Corporation (Hudco), and has also decided to pay back the Rs 52-crore remainder of the loan it borrowed from the Central financing agency.

On the seaward side, the Vallarpadam container terminal project has been a long-standing dream of the Cochin Port Trust, which hopes to use it to attract cargo from the eastern ports of India, like Chennai, Vizag and Kolkata, as well as from the port of Colombo, which currently accounts for around 90 per cent of container traffic from Indian ports.

But the Vallarpadam project will have to contend with two major threats. The first is the Rs 2000-crore Sethusamudram project - reportedly a particular favourite of the Union Ministry of Shipping - which will link the Palk Straits with the Gulf of Mannar, allowing vessels from the eastern coast of India to avoid circumnavigating Sri Lanka to reach western shores.

The second competitor is the Tuticorin port, which is planning major dredging to allow it to receive larger vessels. Tuticorin is already giving the CPT a run for its money by reporting a quicker throughput of cargo.

However, the rate at which cargo handling at Indian ports have been growing over the years have ensured that not only can the existing ports grow in the coming years, but there is considerable potential for more projects and expansions. Each of these ports and projects are expected to grow based on their core strengths and competencies.

In any case, competition can only be good for both the Vallarpadam terminal and the Nedumbassery airport. Each of these infrastructural projects also points to the possibilities of private-public partnerships. As the country's first airport facility outside the ambit of the Airports Authority of India, CIAL was financed through a public limited company formed innovatively with equity participation by the Kerala Government and a large number of non-resident Indians, a majority of whom are Middle East-based non-resident Keralites. The Vallarpadam project will also build on private-public cooperation.

With such good tidings for the State, Kerala's new Chief Minister has more than enough to ensure a healthy balance sheet at the end of his much-touted first 100 days in office.

The writer can be contacted at kgkumar@gmail.com

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