Wednesday, February 22, 2006

sensible comment on the vizhinjam port project

feb 16th
 
although scepticism is coming from a different direction: the economics of it.
 
i am more worried about the chinese govt angle.
 
he's right, there is no need for 2 container terminals in kerala. the one in cochin should not have been sanctioned. it is a clear sop to local vested interests there.
 
===================
 
During my recent holiday trip to S.India, when I spent a delightful couple of
weeks in Kovalam beach near Trivandrum, it came to my attention that the state
government of Kerala has decided to proceed with a Rs. 43.6 billion, BOT
container port facility at Vizhinjam port, about 5 miles from the famous Kovalam
beach.  I believe the project is now with the Union Government for final
clearances (including national security, given that two of the three "private
sector" partners are Chinese companies, most likely state-owned).

The lead consultants, L&T, executive summary report can be accessed at
www.keralaports.gov.in , and which concludes by stating that " the project is
marginally financiaqlly viable with IRR on equity at 14.9 percent ... and that
the state government may consider providing capital support to...bridge the
viability gap".  News articles report that the Kerala state government will
contribute Rs. 1.78 billion for a 24 percent equity stake and a further Rs. 800
million in infrastructure developments .. I guess these are in addition to the
so-called capital support to bridge the financial viability gap.

The consortium that won the bid consists of three partners: the Mumbai-based
Zoom Developers; and two Chinese companies, the Kaidi Electrical Power Company
and the China Harbor Engineering Company.

My concerns about this possible "white-elephant" include:

  Is there sufficient market demand for two major container facilities within a
  few hundred miles of each other and in the same state ?...  a major facility
  is being constructed by Dubai Ports at Cochin harbor.  The L&T report
  conveniently avoids any analysis of this potential cannibalization of market
  share.
  Environjmental and Social Impacts.  L&T conducted the env't and social
  analyses with the Loyola College of Social Sciences -- I'm not sure how
  credible or objective this was.  The project is very likely to destroy the
  vibrant tourism sector along the Kerala coast near Trivandrum which literally
  employs tens of thousands of the local community.  In contrast, the new port
  facility is only likely to employ about 820 workers initially and 2,700 by
  2017.
  Does this project warrant state subsidies when there are higher priorities to
  reduce poverty in rural areas of India and when Kerala state government
  finances are so precarious?
  What are the national security concerns with the participation of two Chinese
  (possibly state-owned) companies in the consortium?

Would appreciate a debate on this project proposal, especially by our colleagues
in the know in India.  With best regards,
 

7 comments:

Cacoethes said...

I am greatly concerned about the security aspect not only of the "vizhinjam port project" (vpp), but also the "modernization" of Delhi and Mumbai airports by private companies.
In connection with vpp, you have mentioned "Dubai Ports". There have been news reports from USA about security concerns in "takeover" of six major shipping ports, apparently by the same company. Please see the following:

(1) http://www.nytimes.com/aponline/national/AP-Port-Security.html The New York Times | Saturday 18 February 2006
Firm Sues to Block Foreign Port Takeover
The Associated Press
Washington - A company at the Port of Miami has sued to block the takeover of shipping operations there by a state-owned business in the United Arab Emirates. It is the first American courtroom effort to capsize a $6.8 billion sale already embroiled in a national debate over security risks at six major U.S. ports affected by the deal. ...

(2) http://www.nytimes.com/2006/02/19/politics/19cnd-port.html?ei=5088&en=f3fd55826133074f&ex=1298005200&partner=rssnyt&emc=rss&pagewanted=print The New York Times | February 19, 2006
Lawmakers Increase Criticism of Dubai Deal for Ports
By BRIAN KNOWLTON,
International Herald Tribune
WASHINGTON, Feb. 19 — Legislators from both parties continued today to sharply criticize the Bush administration’s approval of a recent sale that would give a Dubai company control over shipping facilities at six leading American ports, saying that it raised fundamental security issues.
Dubai Ports World, a state-owned company, is completing its $6.8 billion purchase of the Peninsular and Oriental Steam Navigation Company, which operates commercial operations at shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
The homeland security secretary, Michael Chertoff, reiterated the Bush administration’s defense of the arrangement, saying today that such transactions were closely examined by a committee that includes several federal departments or agencies, including his own, the Treasury Department and the F.B.I. He noted, too, that Dubai is considered an American ally in fighting terrorism. ... ...

and
(3) http://www.nytimes.com/2006/02/21/politics/21port.html?_r=1&oref=slogin&pagewanted=print [The New York Times]
Pataki Joins Opposition to Takeover of Ports
By David D. Kirkpatrick and Patrick McGeehan
The New York Times | Tuesday 21 February 2006
Washington - The Republican governors of New York and Maryland on Monday joined the growing chorus of criticism of an Arab company’s takeover of operations at six major American ports. Both raised the threat of legal action to void contracts at ports in New York City and Baltimore.
“I have directed the Port Authority of New York and New Jersey to explore all legal options that may be available to them in regards to this transaction,” Gov. George E. Pataki of New York said in a statement.
Gov. Robert L. Ehrlich Jr. of Maryland told reporters that he had “a lot of discretion” and was considering his options, including voiding the contract.
Pushing back, officials of Dubai Ports World defended the federal government’s speedy approval of its takeover, arguing that both the newly acquired North American division running the terminals and its new Arab parent company had worked closely with United States security officials for decades. ...

I find it very strange that NO POLITICAL PARTY and NO PERSON OF EMINENCE has voiced any security concern about handing over the Delhi and Mumbai airports to private companies.

KapiDhwaja said...

Small mercies regarding the Nuke deal..

Cacoethes said...

You have mentioned "... a major facility is being constructed by Dubai Ports at Cochin harbor." Is this not a security risk? In this connection, please see the following three news reports from USA:
(1) http://www.nytimes.com/aponline/national/AP-Port-Security.html
The New York Times | Saturday 18 February 2006
Firm Sues to Block Foreign Port Takeover
The Associated Press
Washington - A company at the Port of Miami has sued to block the takeover of shipping operations there by a state-owned business in the United Arab Emirates. It is the first American courtroom effort to capsize a $6.8 billion sale already embroiled in a national debate over security risks at six major U.S. ports affected by the deal.
The Miami company, a subsidiary of Eller & Company Inc., presently is a business partner with London-based Peninsular and Oriental Steam Navigation Co., which Dubai Ports World purchased last week. In a lawsuit in Florida circuit court, the Miami subsidiary said that under the sale it will become an “involuntary partner” with Dubai’s government and it may seek more than $10 million in damages....

(2) http://www.nytimes.com/2006/02/19/politics/19cnd-port.html?ei=5088&en=f3fd55826133074f&ex=1298005200&partner=rssnyt&emc=rss&pagewanted=print
The New York Times | February 19, 2006
Lawmakers Increase Criticism of Dubai Deal for Ports
By BRIAN KNOWLTON,
International Herald Tribune
WASHINGTON, Feb. 19 — Legislators from both parties continued today to sharply criticize the Bush administration’s approval of a recent sale that would give a Dubai company control over shipping facilities at six leading American ports, saying that it raised fundamental security issues.
Dubai Ports World, a state-owned company, is completing its $6.8 billion purchase of the Peninsular and Oriental Steam Navigation Company, which operates commercial operations at shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
The homeland security secretary, Michael Chertoff, reiterated the Bush administration’s defense of the arrangement, saying today that such transactions were closely examined by a committee that includes several federal departments or agencies, including his own, the Treasury Department and the F.B.I. He noted, too, that Dubai is considered an American ally in fighting terrorism.

(3) http://www.nytimes.com/2006/02/21/politics/21port.html?_r=1&oref=slogin&pagewanted=print
[The New York Times]
Pataki Joins Opposition to Takeover of Ports
By David D. Kirkpatrick and Patrick McGeehan
The New York Times | Tuesday 21 February 2006
Washington - The Republican governors of New York and Maryland on Monday joined the growing chorus of criticism of an Arab company’s takeover of operations at six major American ports. Both raised the threat of legal action to void contracts at ports in New York City and Baltimore.
“I have directed the Port Authority of New York and New Jersey to explore all legal options that may be available to them in regards to this transaction,” Gov. George E. Pataki of New York said in a statement.
Gov. Robert L. Ehrlich Jr. of Maryland told reporters that he had “a lot of discretion” and was considering his options, including voiding the contract.
Pushing back, officials of Dubai Ports World defended the federal government’s speedy approval of its takeover, arguing that both the newly acquired North American division running the terminals and its new Arab parent company had worked closely with United States security officials for decades.
The unit, P & O Ports, “has long worked with the U.S. government officials in charge of security at the ports to meet all U.S. government standards, as do other foreign companies that currently operate ports in the United States,” said Michael J. S. Seymour, the unit’s president....

Why is there no such security concern expressed by any political party or eminent person in the case of "the vizhinjam port project" or the "privatization" of Delhi and Mumbai airports?

ARE WE THROWIING OUR AIRPORTS OPEN TO TERRORISTS?

KapiDhwaja said...

Amazing, the security provided for Maharaja Bush's visit..

san said...

Off-topic, but speaking of sense and sensibility, Paris Hilton is delighted at having been short-listed by an Indian director to play the role of a younger Mother Teresa:

http://timesofindia.indiatimes.com/articleshow/1423935.cms

How fitting -- considering the farcical personality cult that already surrounds the Mother, this latest announcement will just liven up the circus.

Kaunteya said...

A good tight slap on secular media !!
Nice one this

KapiDhwaja said...

Swami Ramdev is going great guns..