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Uniform ST may hit minor port projects in Kerala

Mony K. Mathew

THIRUVANANTHAPURAM, June 23

THE uniform sales tax regime for the States, which came into effect early this year, is threatening to upset the development plans of some of the minor ports in Kerala.

Earlier, the States had been competing with each other to offer sales tax reliefs and concessions to attract new investments. But under the new dispensation, they are unable to do it any longer.

According to sources, a couple of companies, which had either signed build, operate, transfer (BOT) agreement or entered into memorandum of understanding (MoU) with the Kerala Government for the development of ports in the State, have now developed cold feet with no assurance forthcoming on tax reliefs and concessions as expected.

The sources said that Saurashtra Cement, Mumbai, which recently signed a BOT agreement for the development of Munambam port near Kochi, is awaiting the final word from the State Government on the issue before commencing the work.

The company's proposal includes the setting up of a cement clinker unit and a captive berth for handling and forwarding the product. The agreement is for a period of 25 years and the project is estimated to cost Rs. 52 crores.

Similarly, Gujarat Ambuja Cement Ltd, which has entered into an MoU with the State Government for developing Thangassery port near Kollam, is holding itself back from signing a BOT agreement for the same reasons. The company is also planning to use the p ort for making further forays into the cement market in the southern region.

The sources pointed out that the uniform tax system did not totally do away with reliefs and concessions. In the case of projects with long gestation periods, known as `pipeline' projects, it was still possible to offer incentives as before, they said.

The Munambam port is located about 15 nautical miles north of Kochi, the industrial heartland of Kerala. It is said that there is scope for reclamation of nearly 100 acres of land for the development of a full-fledged port which could cater to the needs of many industries in the Kochi industrial belt.

The Thangassery port, when developed, will facilitate import of raw nut for being processed at the numerous cashew units in and around Kollam. As of now, the units depend on ports such as Kochi and Tuticorin for import of raw nuts.

Late last year, the Government had signed a BOT agreement with the Hyderabad-based Kumar Energy Corporation for the development of Vizhinjam port near Thiruvananthapuram, the first such arrangement in the State. And it is not known what stand the company has taken in the changed situation.

The three ports figure in the list of five minor ports identified by the State Government for development with private sector participation. Beypore and Azhikkal are the other two ports in the list.