Breaking a seven-year jinx, Lanco Kondapalli’s tender for Rs 8,000-crore Vizhinjam International Deep Seaport in Kerala has got a quick thumbs up from the ministry of defence on Tuesday. And where the Chinese consortium partners were turned down, the Malaysian partner Pembinaan Redzai Sdn Bdh in the new consortium has been let in with two caveats.
One, ships of Indian Navy should be given full access. Two, a nominee of Southern Naval Command should be on Vizhinjam Port Trust’s board.
“Defence nod is a turning point in the project’s fortunes, but two more clearances – one from CBI and another from RAW – are needed to get the act together,” Kerala ports minister M Vijayakumar told FE.
The Vizhinjam Seaport calendar chalks out the first phase, costing Rs 5426 crore, to be through by 2011. The Kerala government enjoys 24% stakes in the 30-years BoT project.
Vizhinjam, near Thiruvananthapuram, is not only envisaged as India’s first mother port, but also as the country’s biggest port with a handling capacity of 4.1 million TEU per annum. A mother port is one which faciliates berthing of big vessels (which are the current shipping trend) to sail in with a depth of at least 14-15 meter. Unlike other ports that demand recurring costs in artificial dredging, Vizhinjam has a natural average depth of 25 meter. The way it is planned, the new port could cater to 12,000 big vessels at one go.
The second big advantage is that Vizhinjam lies in the International sea route. About 61% of Indian containers are transshipped through the ports of Colombo, Singapore and Salalah. This means that Indian exporters pay extra costs (freight costs at 11.4% of cost, insurance and freight-compared to the world average of 6.1%). A recent study by Container Shipment Economics say that Vizhinjam port could trim these costs. IL&FS and Hauer Associates, who associated in this study, estimate that as much as 1.35-1.60 million TEUs are likely to be diverted through Vizhinjam by 2016-17.
Union defence minister AK Antony, as former Kerala Chief Minister, is familiar with the Vizhinjam port’s clearance blues. All the same, with Chiefs of Army, Navy and Air Force unanimously frowning at the Chinese partners of the consortium who got the tender, he was unwilling to give it the goahead.
Left had raged at Centre slamming the doors on the Chinese consortium for Vizhinjam and Hong Kong-based Hutchison for Mumbai and Chennai ports. But, that did not stop LDF government in Kerala from hemming and hawing through a long-winded route of retendering. With Chinese parters dropped, the defence ministry has now breezed through its clearances in a record 20 days.
But the work on the strategic port is still under defence and home ministry scanner, sources said. This is because the Hyderabad-based Lanco Kondapalli, which won the final tender, partners not just Lanco Infrastructure, but also the Malaysian firm Pembinan Razai.