VPT to pay Rs 30 crore for Sethusamudram canal project

Visakhapatnam Port Trust (VPT) is slated to contribute about Rs 30 crore towards the implementation of the Sethusamudram ship canal project. VPT in its board of trustees' recent meeting had taken approval for this investment.

The Ministry of Shipping has formed a special purpose vehicle, Sethusamudram Corporation Limited, to implement the Rs 2,000-crore Sethusamudram project.

The central government has directed the VPT, Paradip Port Trust, Ennore Port Trust, Chennai Port Trust and the Dredging Corporation of India to contribute Rs 30 crore each while the Shipping Corporation of India and the Tuticorin Port Trust will contribute Rs 50 crore each as equity.

An analysis of the direction of trade and size of the vessels deployed in the Visakhapatnam port has revealed that five to eight per cent of the traffic handled by the port will benefit from the Sethusamudram project, VPT sources told Business Standard.

It is estimated that the proposed canal will save close to 18.45 hours in average time resulting in savings of about Rs 5.36 lakh per voyage.

In the current fiscal, VPT will contribute about Rs 2 crore to the Sethusamudram Corporation Limited, while the remaining amount will be allocated during the next fiscal, K V Gupta, financial advisor and chief accounts officer of VPT, said.

The special purpose vehicle will collect toll from the vessels passing through the canal at rates to be approved by the government. "Keeping in view the return on capital employed, out of the revenue generated VPT will get its share for the equity contributed," he said.