Page 277 - Failure to Triumph - Journey of A Student

ships save thousands of nautical miles in sailing distance and hundreds of hours in sailing time. The
difference with the Sethu Samudram project is that the ships will probably save a few hundred miles
and at the most two days in sailing time.

Issues to be resolved

Economic

Some naval hydrographers and experts suggest that the project is unlikely to be financially viable or
serve ships in any significant way. The savings for ships that originate from Kanyakumari or Tuticorin

is between 10 and 30 hours. For ships from other destinations like the Middle East, Africa, Mauritius
and Europe, the average savings by using this canal is just eight hours.

At the present tariff rates, ships from Africa and Europe will lose $ 4,992 on every voyage, as the
savings in time for these ships are considerably lower than what is calculated in the DPR. This loss is
insignificant as 65% of the projected users of the canal are those from Africa and Europe. If tariffs
are lowered to a point where ships from Africa and Europe will not lose any money from using the
canal, the IRR of the project falls to 2.6%. This is a level at which even public infrastructure projects
are rejected by the government.

Depth envisaged for this canal is designed for ships with weight of 30000 tonnes and less. Most of

the new generation ships (with weight more than 60000 tonnes and tankers with weight above 150000
tonnes) cannot make use of this canal.

Cash crunch for the project

Axis Bank Ltd. was appointed “loan arranger” for the project in 2005. Since its inception in 2004,
costs have skyrocketed to at least Rs 4,000 crore, interest rates have crawled higher and old loan
terms have lapsed. Even before the first dredger began its work in 2005, costs had already spiralled
to more than 3,500 crore. The loan sanctions, valid only up to 2,400 crore, lapsed. To secure more

money, Sethusamudram Corp. Ltd would have to return to the drawing board, draw up new reports,
sit with parliamentary committees and receive fresh approval. The project cost which originally
stood at 24,700 crore will now escalate by almost 4,500 crore, a shipping ministry source said.

Environmental

According to the Environmental Impact Assessment carried out by the Indian government on July 2,
2005, the project would disturb the ecological balance and would be the reason for the death of
corals. It is also an important fishing ground for the state of Tamilnadu. There exists a biological park
in the vicinity of the proposed project. Local fishermen, Hindus, Muslims and Christians alike oppose
the present route and are demanding alternative channels, which are available. They say the present

channel would destroy marine life and corals. This will kill the trade in shankhas (conch shells) that