Contemporary issues related to human development , regional and global.

Category: kerala

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

Colloquium on Kerala power sector: recipe for a culture change

Colloquium on Kerala power sector:
recipe for a culture change

1. Introductory: The colloquium held on 16th October 2014 at Anugraha Hotel, Vyttila was a joint initiative of individuals and organizations, who believed that KSEB is facing a crisis situation today, like many of its counter parts elsewhere in the country. During the sixth and seventh five year plans, KSEB could put to use nearly a third of the hydro-electric potential of Kerala and developed substantial capabilities in the design and construction of hydroelectric power stations as well as the T&D network needed for a fairly efficient state power grid. The State had also built up, during this period, substantial capabilities not only in the design and building of reservoirs, dams, tunnels, penstocks and other auxiliary equipment but also in the manufacture of electrical equipment as well as complex T&D systems.

2. Decline from mid-eighties: By the early eighties Kerala was exporting not only the cheap electricity generated in its hydro plants to the neighboring states but also a host of electrical engineering equipment like transformers, transmission lines and switch gear. However, after the Silent valley controversy, capacity addition by KSEB was only marginal and even this was mostly thermal based. As on now bulk of the electricity sold by KSEB is imported from outside. This prolonged dependency on purchased electricity, coupled with the uncertainties created at the national level by the structural reforms of nineties and the new Electricity Act 2003 have destabilized KSEB, financially as well as organizationally.
3. Present situation: Faulty HRD and HRM policies have led to serious shortages of trained and experienced cadres to manage key positions in this public utility, especially at the top. Computerization programs including ERP at various levels could not take off or was abandoned half-way through, due to lack of understanding or seriousness at the director board level. Delays as well as non-execution of generation projects, hydro as well as fossil fuel plants, are the result of lack of experienced manpower at the top, familiar with power development projects, thermal as well as hydro. There is an urgent need for capacity building and cadre development in almost all disciplines of power systems development and management: engineering design, technology, project planning, finance and general management as pointed out by many. Employees are well organized, disciplined and prepared to accept quality leadership. There is the need for a total culture change in the organization, from top to bottom.

4. Situation at the national level: A World Bank study of June 2014 has virtually admitted the near-total failure of power sector reforms initiated in early nineties and the new electricity act, in meeting even their own declared objectives: Debts of electricity utilities have ballooned to Rs. 3.5 Trillion or five percent of GDP by 2011, the target of full electrification by 2011 was miserably missed with some 300 million households remaining non-electrified, and the objective of an integrated all India power grid remain a pipe-dream despite massive investments in T&D gear.

5. World Bank View on KSEB: Surprisingly, the above said report has identified KSEB as the best performing power utility in the country on several counts, even though under pressure from employees, it did not to trifurcate itself into separate generation, transmission distribution utilities. The box item on KSEB in this report had concluded: “since 2011 its finances have been constrained due to the states declining hydro generation, forcing the utility to purchase power from external sources and draw down surpluses earned in earlier years. Inadequate planning for power procurement to address demand growth has exacerbated the change in fortune of the utility, which remains well managed is but is now suffering from external shocks.”

6. Reorganizing Kerala’s power sector: Any major course correction of the current reform process at the national level is unlikely in the immediate future under the present circumstances, though there is every indication that the country will be under compulsion to limp back to the old federal system with more autonomy for the state governments, and CEA playing once again the key role of a federal authority. Taking into account the observations in the present WB study referred to above, and based on the findings of the Colloquium, it will be prudent for Kerala Government to launch a program for re-organizing KSEB on the following lines,

(a) KSEB will be reconstituted as a holding company, one hundred percent shares owned by GOK as on now but with an expanded board of directors giving equal representation for government, employees and consumers as in the French Electricity Board (EDF), and as recommended by the High Power Committee appointed by the previous Government. KSEB could function as the TRASNCO of Kerala as spelt out in the Electricity Bill, dealing with the T&D responsibilities directly and leaving generation responsibilities to two specialist joint venture subsidiaries, one for thermal generation and the other for hydro generation. KSEB will retain majority shares in both the subsidiaries.

(b) KSEB employees who work for the T&D functions that constitute around 85 percent of the present work force will continue as direct employees of the holding company: Participation of the representatives of employees and customers at the top level management of KSEB, will improve its accountability and sense of responsibility as a public utility, and also help in a big way to launch and implement system improvement programs in a far more meaningful and effective manner. The holding company should be held responsible for addressing the environmental concerns with the help the two subsidiaries, specializing in Hydro and Thermal generation.

(c) A Kerala Hydro Power Corporation (KHPC) may be floated as joint venture with National Hydro Power Corporation (NHPC) for the operation and modernization of existing hydro plants and for taking up new hydro projects within the state, including the augmentation and modernization of the existing plants. Projects of less than 500 KW or so can be left to ANERT for non-grid power development. As an organization specializing in hydro generation, KHPC will be useful in augmenting specialist manpower needed for the design and operation of hydro power plants and also for addressing the environmental concerns in a more effective manner.

(d) A Kerala Thermal Power Corporation (KTPC) may be setup as joint venture with National Thermal Power Corporation (NTPC) with similar objectives as for Hydro. Even NTPC Kayamkulam could be brought under the purview of KTPC. As an organization specializing in thermal generation, KTPC will help in augmenting specialist manpower needed for design and operation of thermal power plants and also in addressing environmental concerns related to thermal power generation in a more effective manner

(e) KSEB will buy power from its two subsidiaries, KHPC and KTPC, on a cost plus basis. NTPC and NHPC being Navaratna companies and technology generators for the country will be in a position to help the capacity buildup of these state level subsidiaries rather quickly and effectively. It will facilitate a major culture change in Kerala’s power sector.

(f) Activities of ANERT may be brought under a commercial undertaking jointly owned by Central and State Governments to continue the promotional and R&D work on renewable energy and distributed generation program for remote and rural communities in conformity with the policies of the ministry for renewable energy and, supplementing the power development programs of KSEB

7. Summing up: The above re-construction plan of the states electricity sector will conform to the state level objectives of Electricity Act 2003 and will be in harmony with the aspirations, wishes and preferences of KSEB employees. The proposed joint ventures will help Kerala to develop quickly the much needed specialist manpower, expertise and technology needed for the healthy development of its power sector.

8. The next step: CEA may be assigned the lead responsibility for finalizing this conceptual plan and requested to prepare detailed operational plans for implementing it.

9. Colloquium participants: PC Syriac, K Vijayachandran, MP Sukumaran Nair, P Parameswaran, KR Unnithan, KS Damodaran Nampoothiri, Philip P Paulose, S Balakrishna Menon, G. Sudhadevi, G Balachandran, Anilkumar P.Kv, S Jayathilakan, MT Varghese, AR Unnikrishnan, CV Usha, PR Shaji, KK James, EV Mohandas, Malippuram Khalid, G. Ram Mohan Nair, AV Narayanan Nair, CK Raghavan, MV Varghese, CK Joseph, PD Aruna, K Asokan, MK Parameswaran Nair, EN Gopinathan Nair, KK Karuppankutty, PH Abdul Rasheed, MA Abdulkhader, Roy Xavior T, VV Satyarajan, Sivarajan, John Darrel, TK Moidu, AR Satheesh, George Thomas, Robin Sebastian, CV Subramanian


By Engr. K Vijayachandran FIE

Mulla Periyar, the more than a century old gravity dam in Kerala owned and operated by the neighboring state of Tamilnadu is once again live in the regional media. It is a ping-pong game, quarter century old and played by the media and opportunist politicians from both sides both sides. Its entertainment value had greatly come down with the last definitive verdict by Supreme Court, about an year ago, authorizing Tamilnadu to go up to 142 feet of reservoir level, six feet above the restrictions fixed by the court in 1979, pending a final decision.

Dispute was about the safety of the old gravity dam and not on any sort of riparian rights. Tamilnadu is quite within its legal and moral right to store the water in the reservoir up to 142 height which is supported by the best of professional opinion in India, globally respected for its dam related expertise. Kerala has lost the case legally, morally and politically. Its last weapon was a horror film DAM900 depicting the massive destruction of four Kerala districts with a population of over four million ion people.

Horror scenes with tens of thousands of bloated carcasses of humans and animals floating around the flood were acclaimed as great cinematic achievements. But hardly anybody, in Kerala, was interested in the movie and Tamilnadu had simply banned its exhibition: Film had proved beyond doubt the limitations of art in distorting facts and manipulating human minds. Opportunist politics and other vested interests have totally failed in instigating processions and satyagrhas, this time, despite attempts by small sections of the media. Some five hundred families staying on the downstream of Mulla Periyar were advised to move to safer places. But they were not convinced about the official logic.

There is the argument that even the best of predictions could go wrong some time and the preparations to deal with accidents may not work. They insist on unreasonably high safety factors. However, one of the suggestions now made by the Kerala side is worth considering: Why not limit the water level in Mulla Periyar to the minimum dictated on by the actual irrigation demands on the Tamilnadu side. Kerala has suggested that level in MP may be raised beyond 136 feet only after filling the Vaigai reservoir to the maximum limit, and only when it is absolutely necessary for the farmers.

This is break from the endless debates on safety, possibly a healthy development: by moving to a dialogue mode, lot of problems could be easily resolved. In fact, when and how much water was required by Tamilnadu farmers or the actual storage and water level requirements were never discussed or debated by the court or the media. Let us hope that that such discussions will take place, now: After all, dams and reservoirs are extremely flexible instruments and we are sure to discover plenty of solutions, as we play them.

Another equally interesting debate has now sprouted from the higher water levels of MP. This relates to the over 6400 acres of land that got re-submerged under water, after some three and a half decades. Reports are slowly coming in on the desirability of ecological and environmental changes these areas are now undergoing: Such issues, though not unexpected, were never discussed or debated within or outside the trial courts.

Earlier, there were also stray reports on illegal settlements, by businesses, tourism and religious establishments that had come up on the tracts of lands vacated by MP waters. We may hear about them more in the coming days.

19th Nov 2014

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