Sunday, October 15, 2006

A Thousand Lights for a Port......

Today there was a unique protest outside Kerala's seat of power, the Secretariat. A thousand lights were lit by people who wanted to register their protest at a long standing demand getting postponed yet again.

The protest, one which I wanted to join but could not as I had to fly out to attend a meeting, was against the denial of security clearance to the Vizhinjam International Transshipment Terminal. This $ 1 billion project, the biggest FDI ever in Kerala, has been making the news lately. Sadly, mostly for the wrong reasons.

The Central Govt. denied security clearance to the consortium of Chinese firms which had bagged the tender floated by the Kerala Govt. last year. The reason?? The Big Bad Reds posed a major threat to that end-to-all term - National Security - by getting involved in India's ports. Another Chinese (Hong Kong) firm - one of the world's biggest Port operators - Hutchinson Whampoa - had been unceremoniously booted out of bidding for new terminals in Mumbai and Chennai. So what's it all about?

Of course, the Chinese have had quite a love-hate relationship with us. They came over the border and snatched quite a swathe of land while Pundit Nehru was still saying "Indi Chini bhai bhai!", lol! And now of course, they are our biggest competitors for the title of regional superpower and economic powerhouse. Well that war was all of 40 years ago and this current one is fought on the global trade battleground, by no means a shooting war.

The Centre believes that China is spreading its influence into the Indian Ocean area by tying up with Pakistan and Myanmar. In fact, China is building a deep water port at Gwador in Pakistan. Wierd coincidence, but I was read a reference to Gwador in Forsythe's latest novel - The Afghan. There, it is mentioned as a hot-bed for smuggling, opium running and radical Islamic. Apparently, now the Chinese are working to turn it into a deep water port right next to the main shipping channels out of the Persian Gulf and the Red Sea - Suez Canal. It could turn into a massive transshipment hub, and a strategic naval base for Pakistan, and maybe for China.

Okay, so the Chinese are not exactly the friendly and trustworthy neighbours. But building a port in an allied country (Pakistan and China have active military cooperation) is not the same as executing a construction contract in a wary nation like India.

To understand why the Centre's decision has caused such an uproar, we should also understand what the Chinese consortium will do. The China Harbour Engineering Company (CHEC) and the Kaidi Electric Company, with their Indian partner - Zoom Developers - will execute a Build-Operate-and Transfer (BOT) to build the Vizhinjam project over 3 phases and operate it for a concession period before handing it over to the Kerala Govt.

CHEC, a $ 5 billion engineering giant, is a world leader in port building, having constructed large parts of ports like Hong Kong, Shanghai and Singapore which have become world leaders. What we need to understand is that CHEC will be interested in the construction part of the project, where its competency lies. The consortium will most likely find a leading port operator like PSA, Hutchinson, CGM-CM, Maersk or so to run the port itself. And equally likely, most of the actual work will be done by local firms like L&T, Gammon or HCC which will be subcontractors to CHEC. The latter will only bring in a project management team and some special equipment. This is the trend with large construction firms now, like US-giant Bechtel at the Reliance Jamnagar refinery, for example (L&T is one of the subcontractors at the $ 6 billion project).

There is no question of the Chinese setting up a permanent presence in Vizhinjam, just of building it. Companies from many nations - American, Russian, European, Malaysian and even Chinese - are already engaged in building up India's infrastructure. The same CHEC is building the prestigious Bandra-Worli Sealink in Mumbai, right under the nose of the Navy's all important Western Command!!

Trivandrum has a lot of strategic assets, that is true. Southern Air Command, VSSC, Technopark, many top R&D institutions like CDAC and so on. But, if the Chinese wanted to spy on all this, there would be easier ways than building a $ 1 billion port. The port, when under construction and in operation, will be totally under the jurisdiction of India. It will be the local police, Customs and Coast Guard who control the site and access to it. Lol, the Red Chinese Navy is not steaming in nor is the flag of the People's Republic of China going to be flying over it. And if this kinda logic was true, the Chinese should be kicking out Infosys and TCS who are bringing in thousands of people into their new Centres in China.

In fact, something of this sort was once proposed in Kerala. The initial agreement with Dubai Internet City (DIC), which the UDF led Govt. fell over itself trying to push through, had some conditions which would have raised many an eyebrow. DIC asked for such conditions as customs clearances, seperate immigration channels, control over surrounding which would have made the much touted "Smart" City. Thankfully, smarter heads prevailed and such ideas have now been trashed.

On on the subject of Dubai. Much of the initial funding for the Islamic extremist movement which has later metamorphosised into Al-Queda and its terror web flowed from the oil rich Gulf states like Saudi Arabia and the Emirates. Considering this, the fact a Gulf based company is setting up a port facility smack bang opposite the Southern Naval Command's main base should have raised a few security concerns. Yeah, I am taking of Dubai Ports World (DPW) and its much vaunted Vallarpadam project. The fact that DPW has now built a stranglehold on India's container trade by acquiring terminals at almost all Indian ports as well as in Colombo and Singapore is another worry matter altogether.

So why oppose just Vizhinjam? Well, the theories abound. One concerns a certain Central Minister who happens to hold a portfolio concerned with Ports. This gentleman has a pet project planned at Kolachel, near Vizhinjam but on the other side of the state line. This is currently on the rocks, literally! The area is rocky and shallow, and would never even attract a fishing trawler if Vizhinjam came up. This is not all, other commercial interests would be upset if the new port came up at Vizhinjam. For example, our friends DPW would find their near monopoly on the container trade smashed by the new deep water port. Their prized asset, the transshipment terminal at Colombo, would be put out of business when the much deeper port at Vizhinjam becomes operational. Upto 75% of Colombo's traffic is transshipment for India, much of which would migrate to Vizhinjam. The previous UDF Govt. in no small measure, supported this interest. I was personally involved in some of the public awareness and pressure campaigns in support of the Vizhinjam project, and during the course of that a lot of this political intrigue, mostly from conversations with insiders, including top officials. While loudly proclaiming support, the rulers of Kerala were denying their people thousands of jobs and thousands of crores of revenue.

One sometimes that the age of the lynch mob wasn't past us. Else.....!!! It's sad to see that a project so profound it could change the face of the whole State if not that of the whole Nation has taken over half a century to get going. And even now, it is facing obstacle after obstacle. Wonder how India will overtake China at this rate.......we are falling over ourselves to stop vital projects, we don't need the Chinese or the Americans or the Russians to help us with that!!!

Well, candle light vigils have toppled dictatorships and ended wars....let's hope this one can help accomplish a much simpler task - to get a Port off the rocks!

1 comment:

  1. Hi Ajay

    First of all ,excellent blog; good to read about the developments in Tvm and the efforts there to get the Vizhinjam port going.

    However, about DP World using Vallarpadam for alQueda activities is pretty far fetched ! Everyone knows that in US they are controlling 22 ports now aftr acquisition of p& o ports. The controversy was quashed and the deal for the same was pushed thru by Bush himself. If they're managing ports right in Yankeeland then Cochin seems harmless enuff.And i think there are enuff controls built in. Then again the Colombo theory is probably another leftist piece of crap if you consider that Colombo itself became big only because the nationalized Indian ports and its infrastructure couldnt provide for the reqmnts of container shipping and our redtapism. Now with the Indian economy growing and Indian trade being some 41 times bigger than Srilanka, they should be pretty dumb to focus on Colombo when they could develop Kochi



Thanks for your comment, I will take a look at it and put it up at the earliest.