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The Government has approved the implementation of Sethusamudram Ship Channel Project (SSCP). It is estimated to cost Rs. 2427.40 crores consisting of capital cost of Rs. 2233 crores and financing cost of Rs. 194.40 crores. Of this, Rs.971.00 crore would be equity whereas Rs.1456.40 crore will be debt portion. Government of India’s contribution in the equity will be Rs.495 crores whereas Port Trusts of Tuticorin, Chennai, Ennore, Vishakhapatnam, Paradip, Shipping Corporation of India and Dredging Corporation of India will together contribute Rs.250 crores. The remaining Rs. 226 crores will be met through IPO/ private placements.
The SSCP envisages creation and operation of a navigable channel from Gulf of Mannar to Bay of Bengal through Palk Bay so that ships, depending on draft required, moving between east and west coast of India could have a continuous navigable sea route around the peninsula within India’s own territorial waters. This will save up to 424 nautical miles (1 nautical mile = 1.82 kms) and up to 30 hours of sailing time for ships between east and west coast. The total length of the proposed channel will be about 167 kilometers, out of which 89 kilometers have to be dredged. The width of the channel at sea bed level is proposed at 300 meters to provide for safe two-way navigation in the channel. The project would take about 180 weeks for completion.
The project will directly benefit shipping companies since the channel would provide shorter route from the west coast ports and Tuticorin Port to the east coast ports excluding Tuticorin Port and vice versa. The foreign exchange saving of up to Rs. 215 crores (approx.) is estimated in the first year of operation i.e., 2008-2009. Further, due to saving in sailing time, ships can make additional trips, which would exchange their cargo carrying capacity.
The indirect benefits include, construction of ship channel would allow naval and coast guard vessels of travel directly from east coast to west coast and vice versa, thereby saving time fuel cost and response time; additional employment opportunities would be created in the coastal districts of Tamil Nadu; and one of the ports in peninsular India may develop as a hub port for container traffic.
Expeditious completion of the project is in the National Common Minimum Programme of the UPA Government Shri Baalu made concerted efforts to ensure that the project reaches the implementation stage at the earliest. Between 1860 and 1922, as many as nine proposals were considered and investigated for cutting the ship canal. It was in 1955 that the feasibility of connecting the Gulf of Mannar with the Palk Bay by cutting a channel was examined. The Laxminarayan Committee submitted the project feasibility report in 1983.
Department of Shipping has already set up a Special Purpose Vehicle (SPV) by the name and style of ‘Sethusamudram Corporation Limited’ to raise finance and to undertake other necessary activities for the operation of the SSCP.
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