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Revival of minor ports in Kerala -- Grounded even before launch

Mony K. Mathew

AS THE new Government in Kerala is readying itself to sort out issues amidst a severe financial crunch, one of the major tasks will be reviving the development plan for the minor ports in the State.

Though initiated way back in 1995, the programme has not made much headway in terms of actual commencement of work on the ports. And in Beypore -- the only port that progressed beyond the procedural hurdles -- the work came to a grinding halt as soon as it began for various reasons.

The programme was chalked out towards the end of the earlier United Democratic Front (UDF) government, which took a policy decision to invite private participation in the State's developmental projects. In all, five ports were identified, based on the in dustrial growth potential of the respective regions as also in the context of the proposal for setting up a chain of thermal power plants across the State.

The Vizhinjam port, near Thiruvananthapuram, was naturally the first to be blue-printed alongside an ambitious map for the industrialisation of the area. The total cost of the entire project was then estimated around Rs 3,000 crore.

The Vizhinjam port is considered to have the potential to become a major container transshipment terminal on the lines of Colombo and Singapore as it is close to the international shipping route between the UK, West Asia and East Asia. Also, it has a nat ural depth of 16-20 metres within one nautical mile from the shore, and the suspended sedimentation of the area is the least on the entire west coast.

The Hyderabad-based Kumar Energy Corporation had signed a memorandum of understanding with the then UDF government for the development of the port as also for setting up a 400-MW thermal plant in its vicinity. The port, among other things, was to be used for the import of large quantities of naphtha for the power plant. The Kumar group subsequently entered into a technical collaboration with Malaysia's Pembinan Radzai for work on the port.

But the proposal came up against the first major roadblock when Mr A. K. Antony -- who replaced Mr K. Karunakaran as the chief minister during the last one year of the previous UDF regime -- took a firm stand that all the projects with private participat ion should be awarded through the competitive bidding route.

The LDF government that followed took nearly three years to make up its mind on the matter and the Kumar group's proposal was finally cleared by the State Cabinet in January 1999. By then, the plan for the thermal plant had been dropped as it could not g et the fuel linkage. Later, in November the same year, the Government signed a build-operate-transfer (BOT) agreement with the company for the port's development.

The project, featuring state-of-the-art navigational and cargo facilities and a dry dock, was slated to be taken up in phases. The first phase was estimated to cost Rs 800 crore and, when completed, the total outlay was reckoned in the region of Rs 2,000 crore.

But since then, the project has been in a limbo and it is understood that even the preliminary exercises for land acquisition have not been gone through.

The Beypore port, near Kozhikode, had also gone through the same ordeal as the Vizhinjam port. The project included the establishment of an LPG storage and bottling plant by the promoter, Peeves Petroleum Products Ltd., in association with the multinatio nal, Mobil of the US.

The company signed the BOT agreement in March 1998 and though the work commenced soon enough, it came to a halt within months after the company had spent about Rs 20 crore. The reason cited is the stiff resistance put up by the local people who fear that the LPG installations will be a threat to the environment. It is also said that the change in the corporate status of Mobil after its merger with Exxon, has had its bearing on the collaboration arrangement with Peeves Petroleum.

The company had obtained a two-year extension of the agreement with the Government which has also now come to an end. Last January, the Government entered into a 25-year BOT agreement with Saurashtra Cements of Mumbai for the development of Munambam port near Kochi. The project includes setting up a cement clinker unit and the construction of a captive berth for handling and forwarding the product. But work on the project is yet to begin.

Another proposal lagging behind for years is the development of the Thangassery port, near Kollam, by Gujarat Ambuja Cement Ltd. Though it has been cleared by the State Cabinet, the company has so far shied away from signing a BOT agreement with the Gove rnment.

According to sources in the Directorate of Ports, the new uniform sales tax structure for the States has come as a dampener for the promoter companies. Earlier, the States competed with each other to attract investors by offering sales tax reliefs and co ncessions. But under the new dispensation, they are unable to do so any longer.

But, the sources pointed out, the problem could be overcome in the case of the ports being developed in the State. As they are projects with long gestation periods -- known as ``pipeline projects'' -- the Government could still offer incentives as before , they said.

In the case of Gujarat Ambuja, it is learnt that the company had sought the Government's approval for the import of bulk cement at the port to offset the disadvantages arising out of the withdrawal of sales tax benefits. But the previous Government is sa id to have rejected the demand.

The fate of the fifth port in the list -- Azhikkal, in Kannur -- is linked with that of the controversy-ridden Kannur power project proposed by K. P. P. Nambiar and Associates. The port is to be developed by the promoters of the power project.

Observers feel the new Government should look into such issues as sales tax incentives, and draft a time-bound plan to complete the projects. After all, it does not involve any financial outgo on the part of the Government as the projects have been conce ived within the BOT framework.

The Vizhinjam port, near Thiruvananthapuram, is the site for a prospective international port with state-of-the-art facilities... Will it remain on paper?

K. K. Mustafah