Sources said the ministry would also ask the Shipping Corporation of India (SCI) and the Dredging Corporation of India (DCI) to be part of the project as equity holders.
SCI and Tuticorin Port Trust would be putting in Rs 50 crore each. DCI, Chennai Port Trust, Ennore Port Ltd, Visakhapatnam Port Trust and Paradip Port Trust will contribute Rs 30 crore each. The balance equity would be subscribed by the Centre and others. The authorised capital of SPV is proposed to be Rs 800 crore.
SPV would also be raising debt from the market, repayment of which will be guaranteed by the Centre.
The repayment would be made through collection of toll from vessels passing through the canal. Sources said toll would be fixed according to the return on capital employed as per port industry norms but it would be competitive enough to attract vessel transits.
The canal has been proposed for linking the east and the west coast of the country without having to go around Sri Lanka. The ship canal will have two legs one near Point Calimere called the Bay of Bengal channel and the other across the Adams Bridge.
It is estimated that a 12 metre deep channel will cost Rs 2000 with dredging alone costing Rs 1689 crore over a period of four years. The cost may face upward revision since there is an apprehension that hard strata will be encountered in the Palk Strait area.
The government also plans to reclaim 750 hectares of low lying land in Dhanushkodi Island.