The Hindu Business Line : All roads lead to Madurai

A GALAXY of leaders from the United Progressive Alliance (UPA) Government at the Centre led by the Prime Minister, Dr Manmohan Singh, and the Chairperson of the National Advisory Council, Ms Sonia Gandhi, will participate in the programme in Madurai on Saturday to inaugurate the Sethusamudram ship channel project works.

The Tamil Nadu Governor, Mr Surjit Singh Barnala; former Tamil Nadu Chief Minister, Mr M. Karunanidhi; the Shipping Minister, Mr T.R. Baalu; the Finance Minister, Mr P. Chidambaram; and Ministers Mr Dayanidhi Maran, Mr A. Raja, Mr Mani Shankar Aiyar, and Dr Anbumani Ramadoss, not to mention members of Parliament, will participate in the grand function, which will kick off works on a project that has been talked about for close to 145 years.

Even as political parties compete with one another on who should get the credit for getting the project off the ground, inaugurating the works will mark just the beginning of a multi-crore project, which has to cross several stages before it becomes a reality. Raising the Rs 2,427 crore required for the project may not be difficult as the Centre has formed a special purpose vehicle called Sethusamudram Corporation Ltd to execute it.

The corporation has appointed UTI Bank to handle the financial arrangements for the project.

The bank will raise both rupee and foreign currency funds, and handle the public issue or private placement, if any, to complete the financing arrangement.

The corporation has also signed an agreement with the Suez Canal Authority, which would share its experience in building and managing a ship channel facility.

As dredging work progresses, the corporation will have to allay environmental concerns and also ensure that the livelihood of thousands of fishermen is not affected.

Managing these issues will be as big a task as completing the project itself, according to experts.

The project is expected to give a fillip to coastal shipping as it would substantially reduce the voyage time. Ships plying along the coast now have to operate on the main shipping route going past the Sri Lankan coast and the Sethusamudram project will provide a much shorter route between the east and west coasts of India.

However, for coastal shipping to really benefit, the tariff has to be appropriately structured while at the same time ensuring that the project is viable as a business venture.

L&T-Ramboll Consulting Engineers Ltd, a consultant that prepared the detailed project report, has carried out the tariff analysis to arrive at a tariff structure.

It had to come up with a tariff structure that ensured profitable operation of the channel authority and at the same time was not too high to discourage coastal shipping.

The tariff system had to provide incentives to increase productivity and attract more vessels and also remain simple and transparent.

The consultant has worked out the tariff based on the time charter saving and saving in fuel cost and recommended: Rs 16 a GRT (gross registered tonnage) up to 10,000 DWT (dead weight tonnage); Rs 10 for ships between 10,000 DWT and 20,000 DWT; Rs 7 between 20,000 and 30,000 DWT; Rs 6 between 30,000 and 40,000 DWT and Rs 6 between 40,000 DWT and 50,000 DWT.

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