From Deccan Chronicle dated Nov 18, 2007.
SETHU PROJECT IS A WHITE ELEPHANT: By SUBRAMANIAN SWAMY
· The DPR (detailed project report) prepared by L & T –Ramboll for the project calculates the distance and time thus saved for ships using Tuticorin and Kanyakumari as starting points and reaching Chennai at an average of 335 nautical miles and 30 hours respectively. But the error in the calculations is in assuming that all ships will save 30 hours or save 335 nautical miles.
For example, ships from Europe, West Asia and Africa will save much less time than ships moving from the east to the west coast of India. This is because ships sailing on open seas will travel at double the speed than permitted inside the channel, and the arc around Sri Lanka is of less curvature when coming from Mauritius or Europe and going to Kolkata.
At the current tariff levels proposed in the Project ships will in fact find it cheaper to travel around Sri Lanka rather than use the channel.
·The project also calculates Indian and foreign interest rates for loans of Rs.1800 crores at half the current market rates, thus significantly understating the amortization of the loans, and therefore grossly nderestimates the cost of the channel. This naturally lowers the interest rate of return (IRR) on the project in a present value calculation, at less than 2.5% No public sector project is permitted at such low IRR.
The usual way to calculate the economic viability of a project is to estimate the revenues over time, as well as the fixed and variable costs of the project. The net benefit to ships is calculated on the assumption of the tariff to be paid by ship traffic, through the proposed channel, and set against the costs saved by taking a shorter route via the channel.
·Moreover, the now proposed 167 km long channel, created by dredging the ocean floor to a depth of 12 meters and a width of 300 meters, can structurally allow the passage of ships of only 30,000 DWT or lower tonnage.
However, most ocean going ships today are above 30,000 DWT in weight and thus cannot use the channel. And yet, the DPR is premised on 3,000 or more ships passing through the channel, when the number can never be above 500 in the most optimistic projection.
·The legendary bridge of coral reefs and rocks was built, according to the Ramayana, on the direction of Lord Ram. Modern satellite photographs have established that such a causeway of coral rocks and reefs exists. Dr.S. Badrinarayanan, formerly director of the Geological Survey of India, established that it was constructed, and is not a natural formation. Ms.Ambika Soni, the Union minister for culture, has so far hid his report from the Supreme Court.
·The channel route currently chosen (of the total six that had been suggested from 1860 till 2005), involves cutting through the Ram Sethu. Interestingly, all the other five alignments suggested earlier, before or after Independence, called for skirting the Ram Sethu and cutting through land, either on the mainland at Mandapam, or through Pamban Island. The government’s insistence is hurting the feelings of nearly a billion Hindus by preferring this non-viable channel.
·To navigate the channel, a ship will first have to start slowing down two hours before reaching the mouth of the channel. Then it will have to follow several procedures leading to dropping of anchor and waiting for a pilot to board the ship to steer it through the fragile channel at half the speed of its open sea route. All this will consume 15 hours. Between October and December, cyclonic storms and winter monsoon will make the channel unusable.
·The DPR underestimates the total fuel cost as it does not mandate the use of low sulphur diesel in the ecologically sensitive Palk Bay biosphere reserve area. In fact, there is no mention at all of low sulphur diesel that should be used in these areas. Our estimates for fuel savings are extracted from L&T Ramboll DPR, which simply states that the ships will use IPO in the open seas and MDO in the channel where there is a restriction, and a need for a better vehicle response.
Thus, it is false to state that there will be a substantial saving on fuel costs by using the channel. On the contrary, there will be a substantial loss of $500 to $950 depending on the tonnge of the shop.
·The project will also deprive 1000s of fishermen living in TN’s coastal districts of Thoothukudi (Tuticorin), Ramanathapuram and Pudukkottai of their livelihood. Its impact on the fragile Gulf of Mannar will be disastrous. According to a report in Business Line on October 16, the project and fishing activities are mutually exclusive. The nation has to choose one or the other. Fishing or ship channel, TN’s fishermen have not been told this secret yet.
·The Sethu project has been justified on the basis of the cost savings estimates for ships using the channel. These cost savings have not been adequately detailed out and in fact the actual savings for ships using the channel have been grossly exaggerated. This is especially true for ships coming from Europe, Africa or other locations. The fuel savings for many of these ships is in fact negative, while the total savings (Including reduction in time charter) actually works out to just 30% of what is claimed by the L&T Ramboll DPR for most non-coastal ships.
The significantly lower level of savings implies that the tariff that can be charged by the channel will be much lower that that claimed by the DPR. This has significant revenue implications as over 60% ships which benefit will not want to pay the amount claimed in the DPR.
·There is also the security angle to be considered. Once the channel becomes operational, policing it would require a major increase in the assets of the Indian Coast Guard, customs and marine police in Rameshwaram and Tuticorin. The Indian Navy too may have to consider permanently basing some assets in Tuticorin for more intensive surveillance.

-----------------------------------------------------------------