The Hindu Business Line : How Azhikkal can be a major port for Kerala

By virtue of being served by multiple rail lines, a road network and inland waterways, Azhikkal port will be able to offer a competitive edge by keeping the inland transportation costs lower.

IN THE Malabar region of North Kerala, at the entrance of the Valapattanam river in Kannur district, Azhikkal holds out immense potential for development as a major port.

Kochi is the only major port in Kerala. After almost 70 years, the Kerala Government has finalised a developmental plan to make Vizhinjam, near Thiruvananthapuram, an international container transhipment terminal in three stages by the BOT route under a public-private partnership.

Now, a look at the advantages and attractions of Azhikkal to be developed as a third major port in Kerala. By virtue of being served by multiple rail lines, a road network and inland waterways, Azhikkal will be able to offer a competitive edge by keeping the inland transportation costs lower. Second, a major seaport should be located close to the sea so that the expenditure to be incurred on capital and maintenance dredging of the access channel could be kept minimal. Since the length of the approach channel from the sea to the inner area of Azhikkal port is unlikely to exceed more than about five-six metres, which is the depth of the Valapattanam river, Azhikkal is ideal for development as a sheltered harbour. Third, Valapattanam is a broad river, about 1,500 metres wide. On both sides of its bank are large tracts of land (about 3,000 acres) which can be made available for port development as there is not much human settlement. Four, the geographical location of Azhikkal will stimulate industrial development in the backward region and easily emerge as an effective competitor to New Mangalore port, which is situated just 160 km north of Azhikkal.

What will be the prospects for Azhikkal if it is developed as a major port? The New Mangalore port, situated close to it, has handled a record traffic of 33.89 million tonnes with a capacity utilisation of 112 per cent by 2004-05.

The largest item of import through this port is crude oil for MRPL, which accounts for about 12 million tonnes per annum. As the capacity of MRPL is now proposed to be increased to 15 million tonnes, crude oil traffic is bound to go up to 15 million tonnes per annum. Additional facilities have to be created in this port to handle the expected increase in traffic.

Recent reports suggest that ONGC plans to set up a second refinery near New Mangalore with an installed capacity of 15 million tonnes. This could well be located in Azhikkal, which will avoid concentration of crude refining capacity and eminently serve the stated objectives of the Centre to have a balanced regional economic development.

According to reports, the Centreplans to establish two strategic oil reserve storage facility for about 15 million tonnes of crude oil — one on the east and the other on the west coast, and a location near Mangalore is reported to have been favoured by an expert committee. Locating this proposed strategic oil reserves storage facility near Azhikkal port, where land acquisition costs are likely to be much lower, would improve the prospects for Azhikkal port. These two units alone could provide an annual petroleum oil and lubricants traffic of about 20 million tonnes when the facilities become fully operational.

The major item of export through New Mangalore port is iron ore. The annual traffic of this commodity is estimated at about 10 million tonnes; about four million tonnes comes to the port through pipelines and the balance by road mainly from the Bellary-Hospet region over a distance of about 650 km, incurring a freight charge of about Rs 850 per tonne.

The expected commissioning of the Bangalore-Mangalore rail link by March 2006 will provide a direct rail access to the Bellary-Hospet mining area. Consequently, heavy traffic of iron ore to Mangalore by rail over a distance of 550 km can be expected. The rail freight is likely to be Rs 530 per tonne.

If, however, a portion of the iron ore traffic is diverted to Azhikkal port over a rail distance of about 660 km, the freight may work out to Rs 630 per tonne, still much cheaper than what would be incurred by transporting the ore to New Mangalore by road.

As the demand for iron ore in international markets is increasing due to aggressive buying by China, about two million tonnes of iron ore traffic could be expected for being routed through Azhikkal.

Another important item of import through New Mangalore port is wooden logs and wood pulp, about 0.3 million tonnes annually. Since Valapattanam is famous for trade of timber and its products, there is scope for this trade to be extended to Azhikkal port. Large areas of land can be made available on the banks of the Valapattanam river for long-term storage and manufacturing activities at competitive rates.

Other items of import such as coal, fertiliser, cement and edible oil could provide an additional traffic of about 2.5 million tonnes. Within ten years of commissioning, the major port proposed in Azhikkal may find itself capable of handling a total traffic of about 25 million tonnes annually.

Efficient seaports and port facilities, apart from earning considerable foreign exchange, can ensure the balanced growth of the country's economic, social and environmental life.

(The author is a former Chairman of the Mormugao Port Trust. He can be reached at drjospaul@rediffmail.com)

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