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KOCHI METRO: great dreams of real estate business

Source: KOCHI METRO: great dreams of real estate business

Kerala and its Vizhinjam International Port

Kerala and its Vizhinjam International Port

Construction of Vizhinjam International Port, estimated to cost over Rs.6000 Cr, has just started: Project was initiated fifteen years ago: It was facing serious environmental objections and a judicial enquiry was ordered recently to look into the serious irregularities pointed out by C&AG. Copied below is an old note on this project, prepared by me and sent to Kerala State Planning Board, in Sept 2006.

This note was titled by a question: International Container Transshipment Terminals at Vizhinjam, Kochi and where else? Those were the days, when global finance capital was promoting ICTTs all over the world, including the Indian subcontinent: Global consultants were ready with big-ticket feasibility notes for port development, in support of new global markets and trade routs, divined by the IMF-WB-WTO regime.

I was part of the consortium of Rogge Marine Consult and L&T Rambol, who had prepared the first DPR for Vizhinjam ICTT in 2004 (?) on behalf of GOK. Despite several road-shows organized by foreign teams, there were no takers for the project. In the mean time another ICTT project proposed at Cochin was assigned to Dubai Port International on a single tender basis and there was little scope for yet another ICTT on Kerala Coast.

There was a Government change again in 2006, and the new Ports Minister was keen to revive the project at least on a smaller scale, but nothing much happened during the five year term of this Government. In 2011, as soon a new Government took over, a Delhi based consultant was asked to re-design the project as an International Port: All consultants were suitably compensated and Adani group assured of big profits but issues raised in my good old note remain unanswered!

A policy note sent to Planning Board by K Vijayachandran

1. Facts as I know: Myself as well as my consultancy, Industries Research & Services (IRS), were part of the the professional team that prepared the ICTT Project Report for Vizhinjam. L&T Ramboll of Chennai were the lead consultants and we were associated in the study through M/s Rogge Marine Consult of Germany, a leading port development consultancy in the world, for the socio-economic study of the hinterland and for transportation economics. Apart from myself, M/s Gopalakrishnan IAS(Retd) and tranport economist, Jayachandran and Neelambran (both, retired Chief Engineers of Cochin Port Trust) and Vijith V (Naval Architect of IRS) had participated in this study on behalf of IRS.

2. ICTT, a new concept in global shipping: The concept of International Container Transshipment Terminal (ICTT) is a product of the recent large scale restructuring and optimization of global shipping: Huge vessels called Mother Ships, sticking to the trunk routes and visiting only ICTTs, which serve as regional hubs that exchange containerized international cargo, and lighter ships ferrying between ICTTs and domestic ports are a relatively new development in global shipping. ICTTs are already in operating in Colombo, Singapore and Dubai ports which are used as regional hubs by global shippers. Commercial success of any new ICTT in the region depends on the patronage extended by shipping monopolies, as part of their restructuring plans aimed at the maximizing of their global profits.

3. Economic Reforms, Indian Ports and ICTTs: As part of the economic reforms, all the thirteen major ports under the administrative control of the Central Shipping Ministry had engaged global consultants to prepare corporate plans aimed at their corporatisation or privatization. ICTTs were suggested by the consultants in about half a dozen major ports, and the tenth plan had proposed four ICTTs, two each on the East and West coasts. These proposals were supported by an unsubstantiated estimate that India was incurring an additional expenditure of Rs.1000 Crore per year because of wasteful transshipments in Colombo and elsewhere. These plan proposals did not include establishing ICTT at Kochi or Vizhinjam. Cochin Port Trust was asked to build an ICTT outside the plan, with foreign investment on a Build Operate and Transfer (BOT) basis. There was no takers for the much publicized Vallarpadam ICTT, despite repeated global tenders and finally the Cochin Port Trust was asked to hand over its existing Rajiv Gandhi Container Terminal to the Dubai Ports International (DPI), a company owned by UAE Government, on the condition that it will build and operate an ICTT at Kochi, within four to five years, after establishing its techno-economic viability. In the meanwhile, Ports Department of Kerala organized the earlier mentioned feasibility study for ICTT at Vizhinjam, which was in the assembly constituency of the minister for ports. Discipline of national planning having collapsed, questions whether we really need ICTTs, and if we need how many and where all, were never asked or answered. In the meanwhile, the long pending Sethu Samudram Canal Project had taken off under the initiative of the Central Minister for Shipping: This canal will eliminate the need for sailing around Sri-Lanka and cut down sailing distances by 850 Km for ships touching India’s Eastern Coast. Our planners have not cared to study the impact of SS Canal either on the shipping routes along Indian ocean and or on the ICTTs planned as well as in operation.

4. ICTT proposal for Vizhinjam: Located 60 Km North of Kanyakumari, and just 10 Km away from the international shipping route, Vizhinjam with its 20 meter deep contour within a nautical mile off the coast, was identified as an ideal site for a Major Port even before national independence. CP Ramaswamy Iyer, the Dewan of Travancore had commissioned a British consultant who had conducted detailed engineering investigations, prepared preliminary designs and submitted detailed estimates for constructing an all weather port at Vizhinjam in early forties. However, the British had started developing a major port at Cochin which had a big locational advantage over Vizhinjam to serve as a gateway of united Kerala. The site selected for the Vizhinjam ICTT is further South of Vizhinjam and close to Tamilnadu border. In fact the site selection committee would have recommended the Poovar-Colachal stretch, transcending the inter-state boundary, as a more suitable site. The three southern districts of Tamilnadu including Kanyakumari and Thiruvananthapuram district of Kerala were considered as the hinterland of a future harbor in the region. ICTT was, in fact, a national facility in the region and was possibly best promoted jointly by Kerala, Tamilnadu and Central Governments. Though this was considered the ideal solution, the feedback from political leadership was reportedly hostile. Arguments were simple: Projects were primarily for votes, and the prevailing political environment in the country demanded a different gender of cost-benefit analysis! Our German counterpart Captain Menzel, a leading light in our project team and a strong supporter of the joint initiative, was greatly amused by this political situation. He said despite strong local sentiments, such factors could never distort infrastructure planning in his country.

5. Development planning and vote banks: I am not an expert to decide on the developmental priority of an ICTT at Vizhinjam. It is to be decided at the national level, based on some cost-benefit criteria. No such exercise was ever done, as far as I Know, neither by the Federal Government nor by the State Government. Interestingly, an Indian private firm has offered to BOT, the facility jointly with a Chinese Public Sector Enterprise. Why the Chinese Government should think of building this national facility at Vizhinjam? This is not a first or isolated experience: At Kochi, on the promise of building an ICTT at Valarpadam in the coming years, the existing Rajeev Gandhi Terminal was handed over to Dubai Port International, a company owned by the Government of Dubai. Incidentally, this company had recently taken over, the facilities in several international ports, operated by P&O Lines (see my article in Passline of April 15 2006). The promised ICTT may may not come at Kochi but Central and State Governments are committed to make large matching investments in anticipation: Even today, the quantum of public investments needed has not been assessed in full. Political leaders of Left and Right persuasions blindly support such populist mega projects. They compete among themselves in extending blind support to all such vote catching exercises, reminding us of an earlier era of Latin American politics. The recent all party delegation for Vizhinjam was a typical response: There was the rumor that the Central Shipping Minister Balu was conspiring for Tamilnadu and US imperialism was blocking Chinese initiatives!

6. Development planning based on cost-benefit analysis: This was the guiding philosophy prior to economic reforms. Shipping ministry and Planning Commission should have evaluated the ICTT facilities proposed at Kochi, which were infrastructure investments involving thousands of Crores of Rupees, from a point of view of national requirements and priorities. The argument that, such evaluation is not necessary in the case of private or foreign investments, do not make any economic sense. Moreover, heavy public sector outlays are necessary for acquiring land and providing rail and highway connexions, power, water and other related infrastructure in support of this project. UPA Government has, long ago, done away with that type of modern governance at the federal level. Even before assessing how much plan funds would be necessary for supporting the Vllarpadom ICTT, to be built by a company owned by Dubai Government, the Prime Minister of India was under political compulsion to lay the foundation stone for the same, in an imaginary site kilometers away from the actual construction site. An all party delegation to Delhi was mobilized, in support of the Vizhinjam ICTT, by the LDF Government in a hurry, even before the newly constituted State Planning Board with all its experts and advisers, getting even a chance to evaluate the Rs.4000 Crore project. UDF regime had formulated more than a dozen high profile investment projects during the last five years, mainly as vote catching exercise and the LDF Government is under political pressure to inherit them.

7. Fresh look at priorities, necessary: The Vizhinjam exercise had brought to surface the basic weaknesses in the planning and management of our ports. India has a coastline of around 6000 Km with well over 300 minor or intermediate ports, all under the custody of state governments. But the federal Government has no policy perspective whatsoever, for managing them and for the revival and development of coastal shipping, which should serve as a key component of our transport infrastructure at the national level. Concepts like Golden Triangles and Quadrilaterals are pushed on by automobile MNCs but there are no lobbies to support of coastal shipping or inland water transport. ICTTs may be priority investments for world shipping monopolies; they could cut down costs and increase profits at our expense. This is quite understandable. However, if the LDF Government is serious about looking for patriotic alternatives, the State Planning Board should have a fresh look at all the high investment proposals including Vizhinjam and Kochi ICTTs. And, this is true with regard to most of the dozen or so high-profile high-cost infrastructure projects, given shape to by the UDF regime.


*Note: This technical note was slightly modified later and published in the Passline dated 15.10.2006

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