Wednesday, October 3, 2007

150-year dream for 150-year old ships

Swaminathan S Anklesaria Aiyar
SWAMINOMICS

150-year dream for 150-year old ships
23 Sep 2007
http://timesofindia.indiatimes.com/Opinion/Columnists/Swaminathan_A_Aiyar/Swaminomics/150-year_dream_for_150-year_old_ships/articleshow/2393766.cms

Religion and history do not mix well. I shrug my shoulders at those opposing the Sethusamunda-ram canal because it will damage the remains of the bridge th at Ram’s army used in the Ramayana. Now, i too oppose the canal, but on economic and environmental grounds. Its r at ionale is more political than economic. It will become one more public sector white elephant.

The Palk Straits, between Tamil Nadu and Sri Lanka , are so shallow th at only small bo at s can pass through. So, east-west coastal ships have to go around Sri Lanka . So do ships from Europe and Africa to the east coast.

Sethusamundaram will be a furrow dredged in the sea-bed of the Straits, deep enough to accommod at e ships of 20,000 DWT. The canal will save ships both distance (saving fuel) and time (saving daily charges for chartering ships). So, it should be able to charge ships for passage, like the Suez and Panama Canals . This revenue is supposed to make the project economic.

The project is a political gift for Tamil Nadu. It will hugely help Tuticorin port, which today can receive ships only from the west, and not the east. It will improve the viability of existing and planned minor ports in the st at e. Hence, Tamils call the canal a 150-year dream about to come true (it was first proposed around 1850).

Dreams are costless, but canals are not. Project documents claim th at the canal will save ships 36 hours of time and 570 nautical miles of distance. But a recent study by Jacob John in Economic and Political Weekly exposes these claims as highly exagger at ed. Up to 70% of the traffic through the canal is projected to come from Europe and Africa . And John estim at es th at the time saving from Europe to Kolk at a will be only eight hours, and the distance saving 215 nautical miles. From Africa to Kolk at a, the time taken will actually increase by 3.5 hours (being piloted through the canal is a slow process), and distance reduced will be only 70 nautical miles.

John calcul at es th at ships could lose up to $4,992 per passage if they are charged the tariff laid down in project documents. In which case ships will find it cheaper to go round Sri Lanka . If the government cuts the proposed tariff to at tract traffic, John estim at es th at the project’s r at e of return could fall to an uneconomic 2.5%. I expect th at the project will also suffer cost overruns in capital and maintenance dredging, and hence be in the red.

The canal is supposed to be ready by November 2008, not far off. So why has the project not been able to sign up potential users? The finance minister has appealed to priv at e shipping companies to particip at e in a project th at will benefit them, yet no shipping company has come forward. The economics of the canal look much too dicey.

The Suez and Panama Canals save ships thousands of miles, and th at makes them profitable. Sethusamundaram is not remotely comparable. It is designed for small ships (the project documents talk of 20,000 DWT), whereas the Panama Canal takes ships of up to 65,000 DWT and Suez takes ships up to 150,000 DWT.

The Suez and Panama canals were dug through land corridors, and once dug stayed dug - they did not face sand inund at ion from the sea. However, Sethusamundaram will be a furrow in the sea-bed, at the constant mercy of currents bearing sand.

The government’s environmental assessment has cleared the project on ecological grounds. Yet, much of th at assessment was not about sand incursion, but about fears of possible damage to coral reefs, coastal erosion, oil spills, and changes in ocean salinity and temper at ure. Besides, the ecological studies were done from the Indian side of the Palk Straits, and not the Sri Lankan side, and so are technically incomplete.

My own major fear is not so much th at the project will ruin the environment, but th at the environment will ruin the project. I fear th at ocean currents will keep dumping fresh sand in the furrow of the canal. The Palk Straits are shallow not by accident but because sand-bearing currents have made them so. Comb at ing the full force of n at ure is perilous, expensive and sometimes impossible.

The project envisages maintenance dredging of two million cubic metres per year, infinitely more than required by the Suez and Panama canals. Jacob suspects (and so do i) th at actual maintenance dredging will far exceed project projections, rendering the canal uneconomic. An extreme event (like the 2005 tsunami) could dump enough sand to close down the canal.

Finally, global shipping is shifting to ever-larger vessels. Bulk carriers and tankers often exceed 200,000 DWT, and those under 60,000 DWT are being phased out as uneconomic. Old general cargo vessels have been replaced by container ships, which started small but now exceed 35,000 DWT, and may soon touch 75,000 DWT. Such vessels cannot use the canal.

So, Sethusamundaram will be unsuitable for the large vessels of the 21st century. It is a 150-year old idea for 150-year old ships. Th at may be its epitaph.


2 comments:

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joanne said...

this sethusamudram thing has become just 'grist for the mill' for the powers-that-be. kudod to atcrossroads for dealing with the issue objectively and the economics of it. perhaps it may motivate someone like pc in the finance ministry to think!