Will Vizhinjam terminal be another Vallarpadam?

KOCHI: The International Transshipment Project at Vallarpadam (ICTT) projected as a dream venture for Kerala has failed to achieve even 50 per cent of the promised growth in container traffic from Kochi. The dismal performance in the past three years has also raised doubts about the wisdom of the state government pursuing another major container transshipment terminal in Vizhinjam near Thiru avanathapuram.

The first phase of ICTT operated by India Gateway Terminal Ltd (IGTL), a fully-owned subsidiary of Dubai-based DP World was commissioned in 2011. But transshipment has remained quite dismal. Moreover, the financial burden caused by the recurring cost of dredging, has placed a question mark on the future of Cochin Port Trust (CPT). The ICTT when commissioned had the capacity to handle one million TEUs (Twenty Foot Equivalent Units) in a year mainly catering to transshipment cargo. But, the maximum throughput achieved was around 3.5 lakh TEUs with the share of transshipment cargo hovering in the range of 27,000 TEUs.

The first phase of the project with an estimated investment of Rs 2,900 cr was projected along with the Petronet LNG as the answer to the lack of big-ticket investments in Kerala. Ironically, the Petronet LNG project at Puthuvypeen with an investment of a whopping Rs 4,300 cr, also is limping with one per cent capacity utilization.  The bulk of the investment (Rs 1,700 crores) for the first phase of ICTT was given by the union government and the rest by DP World.

Can the ICCT project sail ahead to a brighter future? CS Kartha, President of Cochin Chamber of Commerce and Industry, and a veteran in maritime trade feels that Kochi has a great future given its geographical advantages. “It is for DP World, with their global footprint spanning continents, to take pro-active measures to realize its full potential”, Kartha said.

CD Nandakumar general secretary of the Cochin Port Employees Organization however, feels that the licence agreement between the Port and the ICTT operator needed to be scrapped to overcome the current situation. “The operator has miserably failed in meeting the target of the project in the first three years”, he said.

Nandakumar feels that the maritime environment in the country, especially in south India has undergone rapid changes in the past few years with many new port infrastructure facilities coming up in Tamil Nadu and Andhra. “The situation is not the same as in 2005 when the PPP agreement was signed for ICTT. Now the situation has changed as mainline vessels are making calls in all the new ports”, he said.

He added that the terminal operators also failed to wean away the Indian transshipment cargo from Colombo Port. “It was expected that ICTT would replace Colombo for transshipment of Indian cargo because Indian cargo accounted for 70 per cent of the volume in Colombo Port”, Nandakumar said. But it failed despite heavy concessions given in terms of shipping charges by CPT.
Mr. Kartha however opposed the demand for scrapping the license agreement on the ground that it would only lead to lengthy arbitration proceeding.

The clamour for setting up a transshipment terminal at Vizhinjam with an investment of nearly Rs 5,000 cr has to be viewed in the background the experience of the ICTT at Kochi. Kartha says Vizhinjam will be unviable due to various factors.

S. Suresh Babu managing director and CEO of Vizhinjam project however said that it was being undertaken by private investors after due diligence. According to a trade union leader the Vizhinjam project will be a disaster for the state. “The port will have to reckon with Tuticorin and Kolachal apart from Kochi”, he pointed out.