Big vessels to pay less for using sea canal

Vessels passing through the proposed Sethusamudram Canal may have to shell out anything between Rs 19 per Gross Registered Tonnage (GRT) and Rs 9 per GRT, depending on their size. Vessels with greater capacity will have to pay less.

The draft detailed project report, submitted to the shipping ministry by the Tuticorin Port Trust, has recommended the tariff rates on the basis of 50 per cent of fuel and time charter savings vessels will make due to a lesser distance travelled.

The proposed canal will provide a passage to vessels to go through the Palk Straits between the south-eastern coast of India and Sri Lanka. Otherwise, the vessels will have to travel around the peninsula.

While the vessels have been classified according to their size, the tariff within their respective classes will vary as per their carrying capacity.

The canal, which will have a depth of 10 metres, would be able to accommodate vessels upto a 30,000 Deadweight tonnage (Dwt) size.

The report, however, has said that the rates should be in keeping with the market demands and in case they are needed to be revised, the special purpose vehicle (SPV) be empowered to fix the rates.

It has also suggested that a separate regulatory authority for overseeing the functioning of the SPV be set up, and the Tariff Authority of the Major Ports (TAMP) could act as the appellate body to resolve disputes. TAMP, at present, fixes tariffs for major ports.

The canal could take more than six years to become operational. The dredging or scooping of soil to create enough depth to accommodate vessels will be completed in about three years, while procurement of equipment will take another three years.

The report has estimated an additional capital expenditure of Rs 209.5 crore. The shipping ministry plans to ask for an interest-free loan of about Rs 200 crore for a period of nine years to fund additional capital requirements in the initial period.

"The traffic through the canal is expected to build up gradually and it will take some time for it to turn profitable," a ministry official said. In the meantime, the additional fund requirements could be met through an interest-free loan, he added.

It has also said that the entire construction, including dredging, should be undertaken by private parties.