The Hindu Business Line : A shot in the arm for coastal shipping

THE Rs 2,400-crore Sethusamudram ship canal project (SSCP) will help develop coastal shipping in the country, according tothe Union Minister for Shipping, Mr T.R. Baalu.

So far, coastal shipping has not flourished and developed in the country as expected, he told newspersons on the eve of the inauguration of the project works by the Prime Minister, Dr Manmohan Singh.

According to Mr Baalu, with the proposed Vallarpadam private container terminal coming up at Kochi, large ships would visit the terminal. And, from there cargoes could be transported to the east coast in small ships through the canal.

On the viability of the SSCP, Mr Baalu said the return on investment will be 10.2 per cent. The Government had prescribed a return on investment of 12 per cent at a time when the interest rates were as high as18 per cent to 20 per cent.

However, the project would be viable with interest rates now of around 6 per cent, he said.

The project would break even in nine years, and, thereafter, would start making profit. On completion of the project, the number of ships estimated to transit through the canal is 3,055 for the year 2008 and it is expected to grow to 7,141 in the year 2025 (under moderate scenario), he said quoting a report prepared by consultants L&T Ramboll.

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