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N. K. Kurup

DOES Vizhinjam port have the potential to become an international transhipment hub? The Kerala Government believes so and is quite optimistic about its dream project: Developing Vizhinjam into a world-class port.

Enthused by the initial response it received at the global investors' meet at Kochi in January, the State Government now plans to take the project to potential investors.

It has commissioned a feasibility study, expected to be ready by September, and is getting ready for an international road-show. If all goes well, a global tender will be floated early next year to build what is called a " deep-water international container terminal" on a BOT basis.

Vizhinjam, a minor port at the southern tip of the country, has inherent advantages. Within one nautical mile from the coast, the draft level (depth of water) is 24 metres — almost double the draft available at most major ports in the country.

This will enable Vizhinjam to attract large container ships that cannot call at other Indian ports, and also a large part of the Indian cargo now being transhipped through the neighbouring Colombo and Singapore ports.

A second plus point is that Vizhinjam is closer to the international shipping route (linking Europe, East Asia and the Middle East) compared to Mumbai port or JN Port, which has been identified for developing to a transhipment hub. These are, no doubt, natural advantages for a port to become a transhipment hub.

The project, estimated to cost Rs 2,500 crore, envisages construction of 30 berths catering to all types of cargoes, and other infrastructure facilities such as road and rail links. Initially, the terminal will have the capacity to handle 5 million TEUs.

The plan for the development of Vizhinjam is not new. It has been talked about for many years. Yet, the zeal and earnestness with which the project is now being pursued shows that the State government seems serious.

Pending the feasibility study, it may be premature to comment on the viability of the project. But a closer look at the factors that have a bearing on the project may help in getting a holistic view.

There is no question about the advantages of having a transhipment hub in India. Nearly 60 per cent of Indian cargo is currently being transhipped through Colombo and Singapore. The JN port was set up with the prime objective of attracting this cargo.

Every minister who held the shipping portfolio before and after the port came into being has repeated the transhipment mantra. But JN Port is yet to reach anywhere near its neighbouring international hubs. Efforts to develop Vallarpadam, another potential transhipment hub in Kerala have been on for many years.

The Indian port scene has undergone a significant change in the recent years with the entry of private players. P&O ports, which operates container terminals at three ports, has emerged as major player, accounting for nearly 60 per cent of the country's container traffic.

There are also several other privately run terminals. The government-run major ports will be forced to change their way of functioning. Competition is fast building up in the port sector. This may not, however, affect Vizhinjam, as in any case, it is unlikely to attract large hinterland cargo.

This is because about 60 per cent of the Indian cargo originates in the western and northern parts of the country. The South accounts for just about 15 per cent of the traffic. Infrastructure links are a limiting factor for Vizhinjam to compete with other private ports for hinterland cargo.

Even for transhipment cargo, Vizhinjam will have to compete with Vallarpadam, which will be targeting the cargo now being shipped via Colombo. If reports are anything to go by, the Vallarpadam project will be awarded to private parties shortly.

Competition is the name of the game. And Vizhinjam has the natural edge to beat the competition.

But there is one limiting factor, and that is the most significant one in Kerala: Scheming politicians. Unless they are kept at bay, the port and the investors' money may disappear into the deep waters of Vizihinjam.

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