Sethusamudram Ship Channel Project set to be Beached

by  P Manoj, The Hindu BusinessLine, December 28, 2020

The project has collapsed over religious and political reasons.

Sethusamudram Corporation Ltd (SCL) is set to be wound up, bringing to end an ambitious maritime project that turned controversial over religious sentiments.

“Sethusamudram Corporation has passed a resolution seeking additional grant of 115.72 crore from the government to settle the dues of Dredging Corporation of India (DCI) for the works carried out at the project site along with a proposal to the Ministry of Ports, Shipping and Waterways for winding up SCL,” a government source said.

The BJP was opposed to the project when it was in the Opposition.

About the project

SCL is a special purpose vehicle (SPV) set up under the Companies Act in 2004, with the Cabinet’s approval, to raise funds and implement the Sethusamudram Ship Channel Project (SSCP) — a shorter shipping route between the east and west coasts of the country.

The SPV was formed with equity participation from state-run firms such as Shipping Corporation of India (SCI), DCI, Vizag Port Trust, Kamarajar Port, Chennai Port Trust, Paradip Port Trust and VO Chidambaranar Port Trust. SCI and DCI had invested 50 crore and 30 crore, respectively, as equity in the project.

Billed as India’s Suez Canal, the 2,427.40-crore project was to reduce the voyage time between India’s western and eastern coasts by as much as 36 hours and distance by up to 424 nautical miles (1 nautical mile = 1.82 km), by creating a channel between the Indian mainland and Sri Lanka.

Shipping companies would save on bunker (ship fuel) while India’s exporters-importers would reduce maritime transportation costs.

Ships now take a detour around Sri Lanka. In the absence of a continuous navigational channel connecting the east and west coasts, the ships sailing between the two coasts of India and along the international shipping routes have to circumnavigate Sri Lanka, due to the presence of a reef, known as Adam’s Bridge, located south-east of Rameswaram near Pamban in Tamil Nadu.

An ambitious scheme was formulated to create a continuous navigational channel around the Indian coast to overcome the hurdle.

The SPV has so far spent 836.35 crore on the project, which involved boring a new shipping lane connecting the Gulf of Mannar and the Bay of Bengal through Palk Straits and Palk Bay.

Supreme Court’s stay

Dredging work in Adam’s Bridge area, the controversial part of the project, was stopped from September 2007 in the wake of an interim stay granted by the Supreme Court on a petition brought by Subramanian Swamy, a law maker from the Bharatiya Janata Party.

Ecology and faith

In his petition to the SC, Swamy opposed the project saying it would destroy a rock-and-sand ridge built by Lord Rama.

Since July 2009, all work has been stopped at the project site, pending a final decision on an alternative alignment. At least two experts said the alternative was not “economically and ecologically feasible”.

The final hearing in the matter has been “withheld indefinitely” by the Supreme Court.

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