Sethusamudram project cost rises by Rs 4500 cr

The project cost for the Sethusamudram ship channel project, which originally stood at Rs 24,700 crore will now escalate by almost Rs 4,500 crore, a shipping ministry source said.
The sanction of the revised cost estimate is currently awaiting approval from the Public Investments Board and the Cabinet Committee on Infrastructure.

The work on the Sethusamudram ship channel had started in May 2005 but in September 2007, the Supreme Court issued a stay order against dredging was taking place in the Adam’s Bridge area.

Dredging is the physical digging and scoop-out from the bottom of the sea to deepen waterways, create harbours, docks and berths for large ships to operate.

However, the Supreme Court did not halt the work going on in adjacent Palk Strait. The work was stopped on July 27, 2009.Since then, the contract between Dredging Corporation of India and Sethusamudram Corporation Ltd ended.

Rakesh Srivastava, joint secretary (ports) told DNA Money the ministry is trying to revive the dredging deal and since contract prices are also under revision, it will hopefully be renewed and dredging started anew.

Sethusamudram project cost rises by Rs 4500 cr M S Rao, deputy general manager (marketing), Dredging Corporation of India, said he cannot comment if the company will again bid for the project once fresh tenders are floated.

Srivastava said of the total cost of Rs 24,700 crore for the project, around Rs 800 crore was spent on dredging alone and with work now stalled, the money spent has been in vain.

“When the stay order is lifted and fresh tenders floated, we will have to see if the same amount needs to be spent on dredging again as siltation has begun in the Adams Bridge area where we had dredged,” Srivastava said.

Kapil Yadav, analyst with broking firm Dolat Capital, said when the tenders are floated again, it will open up a huge opportunity for private dregding companies.

“This is because the dredging work done so far would be rendered useless due to to siltation,” Yadav said.

As of now, the entire work on Palk Strait has been stopped and as far as the percentage of work is concerned, roughly 25% of Adam’s Bridge has been completed.
In the case of Palk Strait roughly 70% to 75% of the dredging work has been completed, Srivastava said.

The total excavation that has been done in Sethusamudram is 48 million cubic metres in the Park Strait and 34 million cubic metres in Adam’s Bridge, thus totaling 82 million cubic metres.