Sunday, December 04, 2011

The Lack of a Vision a.k.a How Things are Done in Kerala

While the need to have a Vision is often emphasized for successful organizations, the same holds even more for public policy making. Coherent visions are often absent in mission-critical projects in Kerala and this leads to short-sighted plans which often leave much to be desired.

On the occasion of having completed 11,315 days of existence, I took a few minutes off to try and figure out what was my vision for the rest of my life. Since it was still a bit grandiose, my thoughts shifted to why that most essential of all components of a strategic plan for a State or a City was patently absent from how the lives of the citizens of Trivandrum were being planned out by their elected Government and the legions of public servants. Rather than meander through a whole forest of sorry examples of vision-devoid planning and execution, let me just focus on three immediate ones to drive home my point to you, the recipients of this sort of unimaginative thinking.

The first example is everyone's favorite infrastructure project, the deep water port and container transshipment terminal proposed at Vizhinjam in the southern part of the city. After reading through in detail, the plethora of reports produced for the project, I couldn't help but come to the saddening conclusion that the highly-paid consultants of the project had failed to realize the true potential of what could be India's most important hub port. Here again, there is a plain lack of vision, which should have been set by the Government or its nodal agency, VISL. Of course, the consultants, led by IFC, were being paid to help come with this as well but their attempts to evolve a vision and a mission, neither are ambitious enough nor are they connected to market realities. In short, Vizhinjam has been sold very short as yet another container port which has to compete with Colombo, Dubai and even the likes of Ernakulam, on mere cost terms. A good vision would have enabled the studies to reflect the fact that with its advantages of proximity to the world's busiest shipping lane, its natural draft and the lack of a need for any major maintenance dredging, not does Vizhinjam have an inherent cost and market advantage, but it could develop into a hub port for the entire Indian Ocean region which has great strategic and economic importance (for example, the fact that the bulk of the world's crude oil and coal sources lie along its rim!). The report played down the potential for ancillary activities such as ship-building (fortunately, CSL doesn't seem to have paid much attention to the report!) and the establishment of a power plant based on imported coal (Kerala can only produce about 40% of even its current power requirement!) No, a real vision would have seen Vizhinjam's true potential to be an economic engine to transform the entire State's economy by introducing for the first time in its history, global logistics connectivity at the best rates possible in India and the promise of abundant power that is a key requirement for economic development. With few, if  any, natural resources, Kerala and Trivandrum can only follow the Singapore model which depends on great logistics, abundant and high quality human resources and power availability to foster economic development to propel it far beyond what the rest of India can achieve at the current pace.

For this to happen, the Government needs to accept that Vizhinjam is the one Top Priority for it and not joint-third most important project or whatever. From the evident lack of pressure that the State has been putting on the Center to complete the small matter of the security clearance of the final two bidders, one would even suspect if the UDF wishes that if they wait long enough, these bidders would also go away?! If one also factors in the Cabinet's googly in asking CSL to consider Azhikkal rather than Vizhinjam/Poovar as a location for their Rs 1500 Crore expansion, it would seem that their "vision" is see Vizhinjam eke out a living as a fishing hamlet for all of perpetuity! In a better world, one would hope that the Government would complete land acquisition and infrastructure development through budgetary support (rather than wait for debt to be raised, which can happen only after the bid is finalized and the environmental clearance has been realized, by August 2012 at the earliest!), create a land bank in Trivandrum district for industrial development related to the port and start to put in place the transportation infrastructure necessary for extending the hinterland of the project out across Kerala and into Southern Tamilnadu (rather than only two districts of Kerala as the current project report would have us believe!).

If only the Government had gone in to conceptualize an economic development plan (a Vision!) for the State, which could have then translated down to specific initiatives such as those described above. That would have been cheaper and far more impactful than all those fanciful conference and "investor meets" that the State's industrial promotion agencies host each year.

Our next example, is far closer to home. A few days ago, the media reported that a "Master Plan 2031" for Trivandrum was in the making. In fact, The Hindu reported that:

The first draft of a master plan for Thiruvananthapuram is expected to be submitted to the government by December 31.

The new Thiruvananthapuram master plan 2031 will be a document outlining the city's development agenda for the next 20 years, focusing on the land use pattern, traffic and transportation, infrastructure, solid waste management and sanitation, which will be revised every five years.

A one-day workshop was convened here by the Corporation and the Town and Country Planning Department on Saturday to discuss the preparation of the plan.Officials of various departments; Corporation councillors; chairpersons of standing committees; Corporation officials as well as members of the 19 working groups constituted for giving regional inputs on development issues, trends, area-specific development plans and projects for proposed master plan, took part in the workshop.

It sounds like this was another "babu-only" party and doesn't sound like it had avenues for participation by NGOs or individuals who could add a lot of value. I recall that when this whole exercise had been kicked off in 2009, it has been a multi-lateral effort involving the Government, the Trivandrum Corporation, surrounding municipalities and panchayats, NGOs and individuals and I had been lucky enough to participate and present at the brain-storming session. Today, it seems to have been whittled down to a closed-door study which is unlikely to spend much time and effort on such concepts as a Vision. The exercise had begun by looking at the metropolitan agglomeration of Trivandrum, referred to as the Trivandrum Capital Region, but from the way the Corporation is running the show now, it seems that the scope has shrunk back down to just the Corporation which is highly counter-productive considering that the Corporation has expanded multiple times in the last couple of decades and that projects of manifest importance such as Technocity and the IISER & IISST lie just outside its limits. It is safe to assume that by 2021, forget 2031, the Corporation would have expanded to encompass these areas and more. Therefore, the Master Plan for 2031 should look at the entire urban agglomeration and then some, extending from Varkala to Neyyatinkara, and to Nedumangad/Vithura in the East.

A real urban area master plan needs to start with a forward-looking Vision statement which then distills down to specific initiatives in land use planning, density, urban structure, transportation, economic and social development and utility planning. For example, it could start with, "in 2031, Trivandrum will be a metropolis of 4 Million people which provides a world-class, economically vibrant, cosmopolitan, equitable and sustainable lifestyle to its citizens." It should be forward looking and should plan for the Trivandrum of 25 years in the future not the city of today or 5 years from now. In this way, unlike past attempts at a master plan which were already out of date by the time they were promulgated, the 2031 master plan at least will have a chance to be relevant at least till 2021!

Finally, we come to the recent spate of "transportation" proposals in and around Trivandrum, which include a monorail system for the city, a bullet train linking Trivandrum to Chennai and now, lo and behold, a  "pod-car" or Personal Transportation system! Yes, ladies and gentlemen, some hare-brain wants to bring Tom Cruise's car from the Minority Report and use it as a substitute for the monorail. No matter that PRT solutions are used for localized transportation needs such as within airports or within highly dense Central Business Districts, or that they do not have anything near the capacity demanded by a viable mass transit system. Let's ignore these flights of fancy for now, the main concern is that while the Government talks about all those thousands of Crores of investment, there is no coherent plan in place, let alone a vision!

Consider the monorail, it cropped all of a sudden, perhaps based on comments made by experts like Dr N Sreenivasan. But the Government took a pretty unilateral call on not just the alignment of the system but also the technology to be deployed. It mandated NATPAC (the one saving grace thus far, NATPAC is a competent choice as opposed to certain agencies whose standard reply to any question, even "what's the day today?", is "Metro Rail"!!) to submit a preliminary report on the Balaramapuram - Attingal route. This is sort of like a patient coming, complaining of a stomach ache, and the doctor immediately prepping him for surgery without bothering to find out if his ailment is just a bad lunch! 

If the issue in question was traffic congestion, the solution should have started with an analysis of the traffic situation in Trivandrum and its likely evolution over the next 15-20 years. This in turn depends on a variety of factors such as the urban plan (which is still on the drawing board!), demographics, socioeconomic development and physical environment. The outcome of this study would be an identification of where, what and when transportation solutions are needed. Is monorail the only choice? Could a cheaper system like BRTS work or do we need to plan for a higher-capacity system like heavy-rail MRTS? Instead of restricting NATPAC to a narrow scope (monorail on a particular corridor), the study should have been much more comprehensive. A study of this nature in 2002, although confined to the then limits of the Corporation, led to the conceptualiztion of TCRIP. In the ten years which have passed since then, it has already become insufficient as evidenced by the congestion experienced on the newly widened roads! 

Urban planning and transportation planning are a classic chicken and egg combination. One feeds off the other, yet can influence it as well. For example, a new monorail line is usually planned depending on the current and projected urban structure (to connect major hubs and dense residential catchments) but this line can also influence how the city develops because new developments tend to cluster around the mass transit line. The current "one route" mass transit system is utter folly, as evidenced by so many examples in India and across the world, where single lines have failed because of their inability to provide door step to door step connectivity. Only a multi-route network with subsidiary bus services integrated into it can provide a economical, viable alternative to the personal automobile and thus achieve success. As the first step to this, the Government needs to have a vision for the metropolitan area which needs to be translated into an effective urban transportation system.

Sometimes, the big picture is lost when one focuses on short term gratification. The question is whether this Government would like to be known as one which dreamed up a gazillion Crores worth of fanciful, never-to-be-implemented projects or one which actually executed fewer but impactful projects such as Vizhinjam and a true mass transit system which improved the lives of citizens for generations to come.

Is there a Vision in the room yet?


Sunday, November 06, 2011

A Solution for High Speed on Rails?

Since the previous article on the High Speed Rail proposal, I have received a lot of feedback from many of you, through comments here, on SSC and on the Trivandrum Updates blog, which is the best one-stop shop for news about Trivandrum!

Let me thank everyone who chipped in and all those who didn't but still took the time to read my thoughts. While many of you supported the idea, there were a lot of folks who saw the current proposal for the bloated white whale (Moby Dick, please excuse again! that it is.
After a bit of further thought on the subject and a few discussions with like-minded friends of mine, here's a short proposal for the powers-that-be.

  1.  Without jumping straight to the HSR option, it would do the Government well to appoint a consultant to study all options for implementing "high speed and cost-efficient travel" along the North-South axis in Kerala. This could be HSR, mixed-use rail, an Expressway or even jet-skis on our canals! The message is simple - DO NOT discount any option without studying it properly
  2. If Rail is selected as the best option, adopt a phased approach rather than move directly to the ludicrously expensive HSR
  3. Acquire a 30 m wide RoW either along the existing rail alignment from Trivandrum to Kasargode or along a new greenfield alignment (say, Trivandrum - Kottarakara - Punalur - Muvattupuzha - Kanjikode - Mallapuram - Kannur - Kasargode, with spurs to Ernakulam and Kozhikode) where the land acquisition will be the least expensive.
  4. Construct two electrified broad-guage lines with an operating speed of at least 200 Km/Hr
  5. Operate Acela-like high speed train-sets at up to 250 Km/Hr 
  6. Also operate high-speed freight trains to between Trivandrum and Ernakulam, Coimbatore, Chennai and Bangalore with containers and perishable goods being the predominant cargo
  7. All existing semi-high speed trains, such as the Rajdhani, Duronto and Jan Shatabdi can be run on the new tracks as well
  8. In the future, say 10 years hence, if a market emerges for true HSR, two tracks, either at grade or elevated, can be constructed along the same RoW since no new land acquisition will be needed

It looks like the HSR wave in India is more a knee-jerk reaction to China's splurge on the technology rather than on economic fundamentals. I would guess that the feasibility study will point to only a few viable routes, if any, such as Mumbai - Ahmedabad, Delhi - Agra (?) and Chennai - Bangalore. These would work if the Union Government is ready to invest dozens of Billions of dollars into it. At this time, I would doubt that. For a comparison, the total cost of the National Highway Development Program may be of the order of Rs 150,000 Crores ($ 32 Billion) over the last decade or more, whereas implementing all six HSR corridors proposed now would cost at least $ 200 Billion! If the projects go out on the BOT route, it seems unlikely that there will be any takers without massive subsidies (essentially all the capital expenditure!) and if at all, only for the few routes identified above, not for less attractive ones like the stretch in Kerala.
On the other hand, the phased, hybrid rail development that I have outline above could be set in motion at much lower cost and almost immediately. The principal initial expenditure would be land acquisition. The RoW would need about (600 Km X 25 m = 15 Sq. Km = 3750 acres). If the alignment is chosen to run through sparsely populated interior areas with low land valuations, the average cost could be kept down to about Rs 1 Crore/Acre. This means that all the land could be acquired for about Rs 4000 Crores, or if it is done in two phases, Phase I (Trivandrum - Ernakulam) would cost about 1500 Crores. As mentioned in the previous article, the rail system itself would cost about Rs 5000 Crores.
Since this is not a pure HSR project, the Indian Railways could be roped in. IR does not have the funds, so the State would have to chip with most of the cash, probably through a Special Purpose Vehicle (SPV), which raises debt or issues bonds. Additionally, because of the freight traffic involved, agencies like ConCor and the operator of the Vizhinjam deep-water port could be roped in as equity partners. We could even try to bring in a private operator for the new rail system, who would maintain and operate the system in exchange for fees charged to the operators such as IR, Concor etc.
This would be a complex, hybrid deal with multiple stake-holders but it would probably be able to raise the funds needed in a practical period of time because it can tap more than one source. Rather than leaving the implementation to IR (whose record in Kerala is pathetic) or to a new Central Government entity (for which Kerala would be the lowest priority), this option takes the development of the system into the hands of the stake-holders who are most interested in it - the people of Kerala and key business entities like the Vizhinjam port.
Sound very logical, doesn't it. But to move to a pragmatic solution like this, the State Government needs to take a step back from its current fixation on HSR as the ONLY solution and snap out of the spell spun by DMRC, which seems to have been anointed the one-stop shop for all transportation solutions, even those with no relation to mass transit! The latter has a lot of vested interest in pushing its one-size-fits-all solution, as is evident from its proposal to use Standard gauge (used in the Delhi Metro) instead of the Broad Guage (used in the rest of the Indian railway network), which means that the two systems will never be compatible - forget having trains run on either network.

It's so early in the day for HSR (nothing more than a presentation, yet another shell company and a Face Book quip or two!) that the State Government still has the option of stepping back from economic suicide. Now, if only they would listen.......!

Wednesday, November 02, 2011

Do We Need Bullet Trains?

Over the last few days, a High Speed Rail system linking Trivandrum to Bangalore and Chennai, as well as to Mangalore, has been proposed. While this seems like a sure-shot way to enter the 21st century in terms of infrastructure on the heels of Japan, France and, most recently, China, do we really need bullet trains at cost of over Rs 160,000 Crores ($ 34 Billion)?!
Act One: The Government of India decides in 2009 to set up High Speed Rail lines along six corridors. However, the only corridor proposed in South India is Bangalore-Chennai-Coimbatore-Ernakulam. Apparently some gent at the Railways forget the State's Capital and biggest city! 
Act Two: Last week, a high-level meeting in Trivandrum, chaired by the CM decided to go ahead with the implementation of a High Speed Rail corridor between Trivandrum and Mangalore, via Ernakulam at the trifling cost of Rs 160,000 Crores. Yes, ladies and gentlemen,  One-Hundred-and-Sixty-Thousand-Crores, about 13 times Kerala State's annual plan for 2011-12!

Act Three: The Central Government decides to extend the proposed HSR line to Trivandrum (no surprise, they want the line to have some chance of success right?) and amend the pre-feasibility study accordingly. Our enterprising CM immediately claims that he saved Rs 50,000 Crores on his Facebook page! That would be like my claiming that I just saved a few million bucks because I decided not to buy that Gulfstream jet which I could never afford anyways! What a joke!
Jokes apart, the gazillion rupee question is do we need bullet trains? This project will cost almost as the Gross Domestic Product (GDP) of Kerala, that's a rather humbling figure.

What is High Speed Rail?
HSR is typically defined as a passenger rail system capable of operating at speeds exceeding 200 Km/hr, although many systems in Japan, France, Germany and China operate in excess of 300 Km/hr.

HSR's history began with the stream-lined steam trains of the early 20th Century, built up through diesel-electric and gas turbine propelled trains in the middle of the century before truly breaking out through the electric-powered Japanese Shinkansens and French TGVs.Thereafter, HSR has spread throughout Europe, in a limited manner in the US and now to China. It's now perceived as a viable alternative to short and medium-haul air travel and is often a favored public investment for Governments looking to pump in money to boost their economies.

And how is HSR different from ordinary rail systems? The most obvious difference is the rolling stock, those sleek bullet-shaped trains using stream-lined, high-power locomotives and high-tech passenger cars. But the railway lines themselves are high-tech, usually continuously welded and replete with sensors. The track alignment also needs to be devoid of sharp bends and gradients which means that the route usually has to go over, under or through obstacles like roads, rivers, hills and urban areas. All of this means, that HSR is very expensive when compared to conventional rail, perhaps as much as ten times more.

Why HSR?
HSR competes with road and air travel. In the case of the former, HSR has higher capacity, higher speed of travel and is much more environmentally friendly but is suitable only for inter-city travel as opposed to intra-city travel, where mass transit systems such as monorails and MRTS comes into play. Against aircraft, which are much faster, HSR is competitive at distances of up to 600 Km, where the sum of time taken to travel to and at airports and actual flight times, is often greater than time spent on HSR because they tend to run from city center to city center and seldom experience congestion-related delays.

This sounds pretty good in Kerala, where the distance from Trivandrum to Ernakulam is about 220 Km, to Kozhikode is about 400 Km and to Kasargode is 560 Km. Our roads and rail lines transport very high volumes of passenger traffic. A North-South HSR line sounds a no-brainer. Right?

Well, no.

First of all, let's consider the price-point of HSR. A ticket is likely to cost at least 2-3 times more than the fare of an air-conditioned chair car today. In fact, it would be comparable to the air-fare between Trivandrum and Ernakulam, which is upwards of Rs 1000. This means that the demand for this service is likely to be similar to that for air travel between the two cities, which is not exactly breaking down the gates at this point. One might argue that the Japanese and European HSR systems carry billions of passengers a year, but those are nations with 20 times the per-capita GDP of India and where air travel is wide-spread as opposed to the less than 5% of our population that uses that mode of travel. The best comparison is China, where despite massive funding by the Government, the HSR network's high ticket rates are proving to be quite a headache. (A ticket between Shanghai and Beijing costs upwards of $ 90, compared to the per-capita income of $ 4,300)

Next is the gargantuan cost of the system. With a price tag of Rs 160,000 Crores (let's discount our CM's creative accounting, looks like that day at IIM-K has gone to his head!), it looks more like the white whale (Moby Dick, please excuse!) than a white elephant. To put this into perspective, this project will cost 40 times what is needed to build the Vizhinjam project out to all its phases or will place each of us (man, woman and child) under Rs 60,000 of debt!

Of course, Kerala has its own quirks such as the paucity of land and the paranoia about access controlled transportation systems. After all, one of the slogans that de-railed the much-touted predecessor of HSR, the Expressway project, was the fact that it would divide the State into two. Guess what, HSR tracks are strictly fenced off (you don't want an auto straying into the path of train barreling down at 350 Km/hr), so the same (absolutely hare-brained) concerns are likely to be raised again. Plus, a 20 meter (that's what the proponents claim!) wide strip of land, 600 Km long would need to be acquired. Hmmm, about 12 Square Kms = 3000 acres.

Finally, does it all make any financial sense?  What would it cost to build and operate. Let's consider a simple scenario of Trivandrum - Ernakulam, which would see the highest traffic and would be built first.  The Capital Cost is estimated at around Rs 45,000 Crores, let's take Rs 50,000 Crores. Since the Central Government has not committed to any funding ( and is unlikely to, considering the state of its finances), the money will have to be raised from development finance institutions (read World Bank, ADB, JICA etc) and from the commercial markets. Even if we assume a tame interest rate of 7%, the interest cost alone works out to a whopping Rs 3500 Crores a year. And then HSR systems have high costs of operation and maintenance, with many components including the trains themselves being imported. 5% of the capital cost would be a good figure to start with, and this works out to another Rs 2500 Crores. So, a conservative total of Rs 6000 Crores/year. And this without allotting funds to repay the loans or for maturity of project-based bonds!

How much money will it make? The current proposal talks about trains every 30 minutes in either direction during 7 peak hours (6 - 10 AM and 5 - 8 PM) and every hour during the rest of the day. A total of 31 X 2 = 62 trains a day. The proposal also says that each train will have slightly over 800 seats. That means the total carrying capacity would be around 50,000 passengers a day, and assuming 90% occupancy (!!), the HSR would carry about 45,000 passengers each day. Let's assume everyone pays the end-to-end fare of Rs 1000/trip, leading to a daily revenue of Rs 4.5 Crores and an annual revenue of Rs 1642 Crores.

(Of course, this assumes that there are 45,000 people out there who would be willing to pay a thousand bucks to travel from Trivandrum to Ernakulam and vice versa. To put that into perspective, that is probably an order of magnitude more than the number of travelers between the two cities using air travel or air-conditioned train cars.)

So that leaves HSR slightly under Rs 4400 Crores in the red! Even if we only look at O&M costs (if Sree Padmanabhaswamy contributes the capital!), an annual subsidy of over Rs 1000 Crores is needed to keep the system running.

In case, I made it over complex, the HSR is NOT financially viable. (Not that such minor details have dissuaded proponents of projects like the one Mr Sreedharan (Yes, he is behind HSR as well! Surprise, surprise!) is pushing in the second city of the State.)

Is there a Better Alternative?

I can already imagine many of you, especially those who fervently believe that the current incumbent of Cliff House coined the word "development", would be grumbling that I am being a bitter nay-sayer. In my defense, I am not trying to shoot this down and propose that all of us crawl along congested rail tracks and roads till the end of time, I have a couple of possible alternatives which will not push the State into Chapter 11.

First, let's assume the ideal case that the Government of India agrees to take care of all the funding, at least for the Trivandrum - TN border (to Coimbatore) stretch. The project goes out on a BOT basis and a private developer takes the bid, no doubt with substantial (hopefully, less than 100%) Viability Gap Funding from GoI, possibly as an annuity. In this case, the O&M subsidy could be shared between GoI and GoK. This could be potentially met from the extra tax revenue of economic developed spurred by the new HSR system. Given the state of the Central Government's finances, with the National Highway program running out of steam and the Indian Railways on the verge of bankruptcy, this sounds an unlikely scenario as of now. And then again, even if GoI coughed up the money, that would be eventually out of our pockets.

Second, we could go ahead with building two new tracks from Trivandrum to Ernakulam (and to the Kerala - TN border) on a fresh alignment which suits HSR. However, the tracks will be built to a lower specification, perhaps for speeds of up to 150-200 Km/hr and the trains would be similar to today's Shatabdi. Eventually, as the market becomes more developed, the tracks could be upgraded and high speed trains introduced. This would certainly be cheaper but given the need for major land acquisition, it would still be very expensive and socially disruptive.

Finally, there is the pragmatic option. The current Trivandrum - Ernakulam rail lines are heavily congested, operating at upwards of 110% of rated capacity. With a deep-water container transshipment terminal coming up at Trivandrum and rapid urbanization of the Capital and Ernakulam, both cargo and passenger traffic are likely to surge. Instead of breaking the Treasury on HSR, why not build two more tracks more or less along the same alignment (which avoids heavily built-up areas for the most part)? The new tracks would better in many ways, continuously welded and avoiding the worst bends and gradients. These can make use of existing stations. They would also have only gated railway crossings, either manned or automated.

So two more tracks running maddeningly slow trains? Not exactly. Even tracks not dedicated for HSR service can accommodate some pretty fast trains.The Acela Express is a high-speed train operated by Amtrak between Boston and Washington D.C. on legacy tracks which received only comparatively minor modifications to accommodate the sleek trains which can are capable of hitting 250 Km/Hr. 

 Image Courtesy: Wikipedia

The Acela was my first HSR experience and these trains are some of the very few across the world which actually make money, having captured almost 40% of the high-speed travel demand in the densely populated North-East corridor which includes Boston, New York, Philadelphia, Baltimore and Washington D.C. The Acela incorporates a nifty feature to run on legacy tracks, it tilts as it negotiates bends! The Acela's average speed is restricted well below its maximum by the inadequacy of old overhead electric supply lines and old tracks, both of which are being upgraded. An Acela-clone, running on modern tracks with a modern overhead supply system could easily average over 200 Km/Hr, covering the distance between Trivandrum and Ernakulam in just about an hour!

There is another major advantage of this solution. Local trains would continue to use the existing track. The new tracks would be used only for the HSR trains, which means that there would be a lot of spare line capacity on the new lines. This could be utilized for high-speed freight services. No, I am not crazy. There are freight trains that run nearly at HSR speeds, the one which most readily comes to mind is the Eurotunnel Shuttle. This routinely runs at 150 Km/Hr.

 Image Courtesy: bram_souffreau @ Flickr
In fact, they are already talking about freight trains running at 200 Km/Hr on the proposed Dedicated Freight Corridors. One specific type of freight train comes to mind, container trains running between Vizhinjam and Ernakulam, Mangalore, Coimbatore, Chennai and Bangalore. Operating at speeds in excess of 100 Km/Hr and during off-peak hours, these trains could link India's premier container terminal to important cargo sources/destinations like Bangalore or Coimbatore in 9 hours flat. This kind of service allows the Vizhinjam project to expand its effective hinterland to as far as Bangalore, wherein it becomes much faster and often cheaper to send a container by fast container train to Trivandrum and get it loaded directly onto a 11,000 TEU mainline container ship than send it to Mangalore or Ernakulam and have it loaded on to a smaller ship from which it would be transshipped at Vizhinjam, Colombo or Dubai. High-speed cargo movement can be achieved with existing locomotives and with relatively minor modifications to the rolling-stock. In my view, this ability to move cargo at high speed is the USP of this option.

Yes, the last option is not exactly HSR as you would see in Tokyo, Paris or Shanghai although an Acela clone looks as much of a bullet train as....well...a bullet train! Do we want to spend an immense amount of extra money to travel 300 Km/Hr instead of 200-250 Km/Hr? Is it worth spending Rs 50,000 Crores to travel between Trivandrum and Ernakulam in 45 minutes when we can traverse the same distance in just over an hour, by spending just over 10-15% of that (a new pair of double gauge electrified lines will cost about Rs 20 Crores/Km plus up to Rs 1500 Crores for the high-speed train-sets - a single train-set costs about $ 30-40 Million - Rs 150-200 Crores)? 

Personally, the answer is NO! I hope that the Government gets a competent agency that has no motivation to recommend a ludicrously expensive white elephant (a good selection criteria would be to exclude anyone whose name looks like "DM_ _") and gets an independent study done whose aim should be to identify all rail-based options for efficient passenger AND goods traffic, not just to look at options WITHIN the HSR model. This way, all of us may save some real money and time!

Tuesday, October 25, 2011

The Next Big One - Cap Gemini lands in Trivandrum

Hot on the heels of Oracle Corporation that officially commenced operations from Technopark last month and announcements that IT giants Aegis and ITC Infotech would soon commence operations at the center of Kerala's IT world, here comes the largest technology company in Europe, Cap Gemini, which is all set to launch its latest global center at Technopark soon. In fact, the French tech giant has already started putting out feelers for employees to come to Trivandrum.

Technopark and Trivandrum are heating up on the Indian IT scene, a fact acknowledged by many CEOs at the recently concluded NASSCOM summit at Trivandrum, where many of the top bosses expressed a strong interest in setting up shop in Trivandrum, even chastising the media for failing to let the world know how hot Trivandrum really is! NASSCOM also opened its first office outside the top 7 Metros, at Technopark, another endorsement of the IT's hub coming of age!

Looks like things are changing, we are now in the big league, big time. Stay tuned and strapped in!

Sunday, September 25, 2011

Getting Back on Track - Railway Development in Trivandrum

After years of heady promises and Budget proposals, the development of railway infrastructure in and around Trivandrum has fallen far short of where it should be given the growth of the city, high-technology and the upcoming deep water port at Vizhinjam. With the Indian Railways facing serious resource constraints, let's take a pragmatic look at how we can achieve maximum impact with the least cost possible.
Once upon a time, I talked about how Trivandrum Central would be upgraded to a world-class rail terminus, Lalu Prasad's new mantra for the upgradation of important stations (18 in all, if I recall correctly) including New Delhi, Mumbai, Chennai and Trivandrum. That was four years ago, and since then we have heard nothing else but for a few vague mentions in successive Rail Budgets. One would have been forgiven for thinking that the grandiose idea was mere lip-service, and now it is official. The Railways have given up on the prototypical "World-class" station, New Delhi, and decided to proceed with a much humbler, in-house upgrade. The fact that there is no confidence that the rail hub in India's Capital and largest city can be re-developed, bodes ill for the historic station in Kerala's Capital and largest city. Combined with the near-zero progress in the development of the much-touted Kochuveli Satellite Rail Terminal and the proposed railway station and yard at Nemom, not to mention the still-invisible MEMU (commuter trains on the mainline) and a long list of announced-but-still-on-paper trains, the scorecard of the Railways is looking very dismal for our city.

 Trivandrum Central (Image Courtesy: Wikipedia)

Despite being one of the busiest stations in South India (second only to Chennai) and having robust revenues (Rs 585 Crores from passengers alone in 2010-11),Trivandrum has been on the receiving end of neglect from the Railways for some time now, especially since a lot of decision making authority was shifted to Chennai from the Trivandrum Division. Even projects such as the expansion at Kochuveli, that were formally announced and alloted budgetary support, have made scant progress. Sadly, the latest effort to jump-start the development of these project by holding a meeting of the Railway Minister and his team in Trivandrum seems to have a cropper without any firm plans being put in place, save for the announcement of a yet another official to "coordinate" developmental activities in Trivandrum. Dr Shashi Tharoor did manage to take the Minister on a tour of the facilities in Trivandrum and explain the crying needs of the day to him, and one hopes that this will bear some fruit. All in all, one is left wondering why the Trivandrum Division, which earns hundreds of Crores for the Railways, is saddled with old, second-rate coaches (even for the so-called flagship Rajdhani Express!) and what can be at best described as step-motherly treatment?

Now that it is pretty clear that we cannot expect much munificence from the cash-strapped and unsympathetic Railways, it would be prudent to let go of grandiose plans like two-level platforms (yeah, we will still have to go to Europe or China to see those!) and focus on what all can be achieved at minimum expense that can have the maximum impact.
Trivandrum Central

Kerala's busiest station is congested beyond belief, its 5 platforms proving very unequal to the task of handling over 50 trains a day. To add to the congestion of a city-center station is the need to have nearly a dozen stabling lines and a Coach Care Center. At various times, it has been proposed to shift the non-operating lines and the Center to Kochuveli and Nemom, and to replace them with at least another 5 platforms. Although Kochuveli now has a couple of platforms and stabling/sick lines, these are hardly adequate even for the growing number of trains based at the station let alone for decongesting Central. And Nemon seems even further down below the horizon, at this point.

 Jam-packed! (Image Courtesy: Me @

So what are the quick-wins at Trivandrum Central?
  • Shift as many parked rakes as possible on to the unused lines at the Kochuveli goods yard and even to Kazhakkoottam and Nemom (this will necessitate additional shunting but that should be manageable on a temporary basis)
  • Construct at least two additional platforms at Trivandrum Central immediately (freeing up 4 stabling/sick lines should provide enough space for this); these could be used both for the MEMU service and for long-distance trains
  • Construct Multi-Level Car Parks (MLCPs) on the land available near the Thampanoor flyover and on Powerhouse road. These can be done on a PPP basis so that there is no capital burden for the Railways.
  • Extend the South pedestrian overbridge to cover all platforms; evaluate extending the North overbridge to the bus terminal
  • Open the North entrance (well constructed but closed ever since its inauguration a few years ago!) opposite the bus terminal, with proper access control and potentially with additional ticketing counters
  • Upgrade all platforms to the standards of Platform One with improved floors, digital signage and other amenities
  • Provide additional high-mast lighting on both sides of the Station and add more lights to the platforms
  • Provide fee Wi-fi on all platforms; this could be easily arranged through a sponsorship
These steps can be undertaken at minimal expense, and can be acted upon immediately.

On a slightly longer term, perhaps in the next four years or so, once Nemon becomes atleast partially operational, the Coach Care Center can be shifted there and the land thus freed up can be leased out to a budget hotel operator such as Tata's Ginger or Accor's ETap to set up a 150 key no-frills hotel. This would not only create a rail-hotel at no expense to the Railways, it could also bring in steady revenue through lease-rentals and/or a revenue share.

Additional land could be leased out on a long term for commercial development, such as a shopping mall, because the Railways have almost 800 feet of frontage onto the newly widened Powerhouse Road. This could help pay for further improvements at the Station. This could include setting up another three or four platforms, to take the total to ten or eleven. Two platforms can be dedicated to the MEMU/commuter services.

With its unbeatable location in the Center of the city and its proximity to other transit hubs such as the Thampanoor bus terminal, it is for certain that Trivandrum Central will continue to be the busiest station in Kerala for a long time and the best tactic for its development would be to ensure that only passenger embarkation/disembarkation happens here with all other ancillary activities such as maintenance shifted out to Nemom or Kochuveli.

Using the strategy outlined above, the outlay for the next couple of years may only be about Rs 20-30 Crores with a significant portion of the overall budget in the near future coming through PPP. It is important that all commercial development - MLCPs, hotel and commercial - be given out to private players and not done directly by the Railways or agencies like TRIDA, whose record is pretty dismal.

Kochuveli Railway Terminal
What started with a lot of fanfare as a project to develop the once-sleepy station at Kochuveli into a rail terminal which would almost completely replace Trivandrum Central as the city's main station has petered out into a crawling saga of fund-starved construction, which has only thrown up three platforms, a few sick/stabling lines and precious little else. A number of trains have started operating out of the terminal but its infrastructure continues to be woefully inadequate.
After a lot of talk in the last six years, the Railways coughed up only Rs 30 Lakhs last year, against a minimum of Rs 10 Crores needed to establish the basic infrastructure needed to handle the 28 trains that are operated from it every week. This being the case, the following would be a viable action plan for the station:
  • Complete the island platform and at least five pit/stabling lines in the coming year; this would allow for some pit lines to be freed up at Trivandrum Central
  • Complete the foot overbridge linking both sides of the terminal; there are frequent bus services along the Veli road on the other side
  • Ensure stops for as many long distance trains as possible at Kochuveli to ensure round the clock activity which would allow for amenities such as taxis, buses and food outlets to be operated viably; this would also reduce passenger congestion at Central
  • Erect high-mast lights for the terminal premises and street lighting for the approach road which needs to be widened to 3 lanes
  • Establish a MLCP on a PPP basis
  • Complete an additional 2 platforms and a total of 10-12 pit/stabling lines by 2013
This course of action would necessitate no more than Rs 10 Crores, all of which have already been allocated but is yet to physically disbursed. Over the longer term, an additional Rs 20-30 Crores would be needed for the additional platforms and pit/stabling lines.

In the meantime, 2-3 stabling lines can be developed at Kazhakkoottam station to help take the load off Central, land for this is available at the station and the expense involved in laying the lines would be minimal. Kazhakkoottam also needs improved signage and ticketing facilities, together with stoppages for more peak hour trains and more frequent bus shuttle services from and to Technopark Phases I, II and III.

Nemon Terminal

There were big plans for Nemon, halfway between Central and the proposed cargo yard at Balaramapuram (Junction?!) where the spur line from the Vizhinjam deep water port will meet the mainline. As with the other wishful plans that we have heard from the Trivandrum Division, nothing has transpired so far. The reason is again the same, no money has actually been allocated in the Budget, and on top of that, there is apparently a need to acquire a large parcel of land for the station to be developed to its full potential.
The Railways already have 30 acres of land here, which seems to be more than sufficient for the Coach Care Center (CCC) to be set up although it seems that most of the land is not along the rail line, hence the need for acquiring more land. I would hazard a guess that the maintenance facility which need not be along the rail line, as a platform needs to be, can be set up on the existing land as long as it can be connected to the main line. In comparison, the current CCC facility at Trivandrum Central occupies only about 5 acres of land in the tightly-packed complex. If land is not an impediment, this may be accomplished at a cost of around Rs 50 Crores (a rule-of-thumb figure, considering the fact that a massive coach maintenance facility in Bihar, that sprawls over 118 acres, set to be commissioned in November will cost Rs 230 Crores), invested in two or three phases. Considering the fact that all the equipment can be shifted from the existing facility, the incremental cost would be the civil work on the sheds and new tracks to park the coaches under repair. If budgetary support can be found, this project can be completed in 18-24 months, without waiting for land acquisition to inch its way to a conclusion and this would free up land at Central for commercial development.

In the longer run, additional pit and stabling lines can be added at Nemom so that all North-bound trains operating from Trivandrum Central can be parked here till they are shunted to the platforms there, converting Central to a pure "pass-through" station and freeing up land for the final build-out to 11-12 platforms. Nemon also needs pass through platforms to be used as a commuter rail facility to service the rapidly developing southern part of the metro region.
Commuter Rail, Cargo and other Initiatives

Even a year after the completion of base facilities in Kollam, the long-awaited Mainline Electric Multiple Unit (MEMU) service shows little sign of commencing operations between Neyyatinkara and Kollam, connecting Trivandrum with its southern and northern satellites, including Attingal and Varkala en route. The MEMU is basically a commuter train, such as those that form the backbone of the transport system in Mumbai, but which is capable of running on the main line instead of just on segregated commuter rail lines. The MEMU is designed to move high-volumes of commuters over relatively short distances (an hour's travel or so). It is imperative that at least 3 MEMU rakes be immediately made available so that services on the Kollam - Neyyatinkara stretch can be run every 30 minutes during peak hours (7 AM to 8.30 AM and 5 PM to 6.30 PM) and every 45 minutes to an hour off peak. The introduction of the MEMU service will allow the shuttle trains to be taken out of service and their coaches redeployed to long distance trains. The services along the Kollam-Varkala-Attingal-Trivandrum-Balaramapuram-Neyyatinkara would help in the integration of the Trivandrum metropolitan region and the merger of Kollam into it as a satellite city.

This is a nearly zero cost initiative since the MEMU infrastructure is already in place and the induction of the MEMU rakes would be in effect offset by the freeing up of the existing shuttle rakes which can be redeployed to other services.

On a longer term, the proposed Chenganoor-Adoor-Trivandrum line and/or the proposed Erumeli-Punalur-Trivandrum line can be routed to proceed via Venjaramoodu and Nedumangad to meet the mainline at Nemom. This would provide a commuter ring line to the east of the CBD where MEMUs can be operated to draw in commuters from catchments along the the M.C.Road such as Kottarakara Anchal and Adoor.

The commissioning of the Vizhinjam deep water port will definitely bring additional traffic on to the rail network around Trivandrum even if the primary purpose of the port is transshipment. There will be some hinterland cargo for direct delivery/pickup from Southern Kerala and Southern Tamilnadu, as well as from key industrial clusters like Coimbatore and Bangalore, drawn by the direct access to the biggest mainline ships that will call at Vizhinjam, instead of getting cargo transshipped via, say, Colombo. If a coal terminal is set up at Vizhinjam, and the coal is shipped out by train instead of by a conveyor belt or barges/coastal coal carrying ships, this could mean 30,000 tons or ten rakes will need to be moved daily (for a annual throughput of 10 Million tons of coal). With the rail network running well above 100% capacity at present, this would necessitate the construction of a third or fourth line. The bare minimum requirement would be the immediate doubling of the Trivandrum - Kanyakumari line, on to which the Vizhinjam port would be connected at Balaramapuram. Unfortunately, the Railways seem to be feigning ignorance of this tiny little development, even while they cleared the construction of the rail spur to the port last year. Consequently the Trivandrum Division needs to prepare a master plan for the entire network, not just for Balaramapuram station, to handle the cargo traffic due to the port that is all set to be commissioned in 2014-15, and also ask Concor to immediately conduct studies to link Vizhinjam with the Inland Container Depots (ICDs) in key locations such as Bangalore, Coimbatore and Ernakulam as well as to set up an ICD in proximity to the port.

 A Concor Double-stacked Container Train (Image Courtesy:

Finally, there is one relatively inexpensive but impactful change which the Railways need to make at the earliest. In fact, it would probably cost no more than a few dabs of paint and changes to websites. The change in question is to modify the name of Kochuveli station to Trivandrum Kochuveli (TVK?), Nemom to Trivandrum Nemom (TVN?) and Kazhakkoottam to Trivandrum Technopark (TKP?). When I last enquired about this with the Railways, they mentioned that it could be done with a simple request from the State Government. Painless changes, but ones which would spare thousands of people the trouble of figuring out the fact that a station with the code "KCVL" is actually located in Trivandrum!

Dr Shashi Tharoor has encapsulated many of the points, mentioned above, in a letter that he had sent to the Railway Minister, but these initiatives now need to be pursued with renewed vigour well in advance of the Rail Budget due in February 2012. The State Government too needs to move on from symbolic gestures like hosting the Railway Minister at Trivandrum and create a time-bound game-plan to take a priortized list of projects to pursue with the Railways using its new clout at the Center (being of the same flavor as the Central Govt.) as well as getting all 20 MPs from Kerala on board. Simply put, the initiatives listed above will not cost the Railways more than about Rs 100 Crores over the next 3 years, and this must be put in perspective with the Rs 900 Crores that the Trivandrum Division earned in 2010-11, Rs 600 Crores of which was from passenger traffic alone. By developing additional passenger and cargo capacity, the Railways stand to double or triple this figure and hence, what is proposed is a big win-win.

It's all very good to have ambitious visions for the development of the rail infrastructure in and around Trivandrum, but in today's resource constrained context for the Railways, and given the urgent need for many of these projects, it is most pragmatic to go in for the easy-wins first and to proceed on a track which minimizes immediate expenses and which tries to find revenues to feed costs along the way. Fingers crossed on many of these proposals making coming to fruition, in which case the Railways stand to keep playing an important role in and benefiting from the development of Trivandrum.

Saturday, September 17, 2011

P.P.S: Thanks, Dr Tharoor!

Just a quick note to thank Dr Tharoor for his feedback on the main article about Vizhinjam. More than being the MP of Trivandrum, Dr. Tharoor is now on the Director Board of VISL, perhaps smartest move the new Government has made with respect to the project. Even before joining the Board, he has been very active in supporting the project during the tenure of the previous Government, having brought in the Port of Barcelona to advise and potentially partner in the project and also having used his influence in Delhi to help expedite the key environmental clearance project.

I am sure that his leadership will be key in taking Vizhinjam from planning to reality. As I mentioned towards the end of my article, the Vizhinjam port is a vision, not a mere plan. And in Dr Tharoor, I believe we have a visionary who understands the potential of the project and appreciates how much it can change the face of our city!

P.S: A UMPP at Trivandrum

A few days after I posted the previous article, in which I written that one of the key opportunity areas that the market study for the Vizhinjam port had missed was the possibility of setting up a coastal coal-fired power plant that would import its fuel through the deep-water port at Vizhinjam.

As if to underscore the necessity of such a project in maintaining energy security for Kerala into the foreseeable future, The Hindu reported on September 16 that the Kerala State Electricity Board was exploring the possibility of setting up a 1000 MW thermal power plant in Orissa adjacent to the coal fields that it had been allotted a few years ago. In the report, the Electricity Minister himself admits that the State's energy needs are likely to exceed 6000 MW by 2020 compared to the current generation capacity of just 1800 MW. This is possibly a conservative figure given the fact that the current peak demand is about 3100 MW, at a relatively low per capita consumption of about 700 KWh/year, and once this consumption rises to the global average of over 2000 KWh/year, the peak demand could be as high as 9000 MW!

This means that even if the power plant in Orissa becomes a reality (and I wouldn't bet much on that given the KSEB's dubious project execution capabilities even at home), Kerala is likely to end up with a deficit of well over 5000 MW by 2020 or so. A UMPP's typical capacity is around 4000 MW, and while some of this power may need to be shipped out in the early years of operation, Kerala alone would consume its entire output by 2020, which is not that far down the line!
One of the reasons mentioned for locating the KSEB plant in Orissa and not in Cheemeni in North Kerala, as originally envisaged, was that there were protests about its environmental impacts. If that was the case with a back-of-the-beyond location, there will surely be louder protests against a plant next to the State's capital and only metropolitan city. However, today's coal-fired plants are a far-cry from the smoke and ash spewing monstrosities that most people visualize when they hear the term "thermal power station". With state-of-the-art technology like super-critical boilers, integrated coal gasification, scrubbers, ash filters and clean imported coal (with 4 times less gas, and twice the energy content of Indian coal), a modern coastal UMPP will be much cleaner than many of the legacy industries currently operating in Kerala. The fact that no UMPP has yet been tripped up by the stringent norms of India's Environmental Clearance process is evidence enough of this. MIT's report on the Future of Coal gives more details about clean-coal technology, for those of you who may be interested in knowing more.

The bottom line is Kerala needs energy to sustain its growth as a modern, service-oriented economy and if we are to become self-dependent in this regard, a coastal UMPP is the best solution, given the fact that we have India's deepest port and an ideal strategic gateway for the import of clean, high-energy coal from Australia, Indonesia and South Africa.
The bid process for Vizhinjam is nearing its conclusion and we will know its outcome soon, I just hope that the winning bidder comes to the above conclusion as well.

Saturday, August 20, 2011

Vizhinjam - Doubting Thomases Listen Up!

The bid process for the $ 2 Billion Vizhinam deep-water port project in Trivandrum is nearing its close. The project's nodal agency, VISL, recently released key project reports which have many areas of concern from the perspective of any proponent of Vizhinjam. Some of the most glaring issues are discussed in the article, together with suggestions how the reports could have been made better and some longer-term proposals for the development of this mega-project!

Perhaps you may not have noticed it in the continuing avalanche of temple treasure, Team Anna and the threat of another global meltdown, but the last few days have seen Kerala's largest ever infrastructure project take two key steps forward. The first, of course, is the submission of bids by two entities, one being the Adani Group's Mundra Port and the other a consortium of the $ 3 Billion Indian conglomerate Welspun and Australian construction giant Leighton. One of these firms will now be selected as the master operator of the port (subject to them meeting all the tender guidelines) and potential as the EPC (Engineering Procurement Construction) contractor for Phase I. The second piece of news is that the agency entrusted with the development of the $ 2 Billion deep water port project, Vizhinjam International Seaport Limited, finally launched a decent website, albeit long AFTER the tender process was completed.

Excellent news, one should say, considering the travails that this landmark project has been through in the recent past (not to forget a small 60 year implementation delay!). The fact that the Adani Group has submitted a bid is possibly the most significant as their Mundra Port is already the biggest private port in India and is poised to become the nation's busiest port in the next 3 - 4 years. The Adani's also have a 4000 MW coal-fired power station in development in addition to the Ultra Mega Power Project (UMPP) being built by the Tata group at Mundra, and are the largest coal importers in India. The Group recently acquired the Abbot Point Coal Terminal in Australia for the trifling sum of $ 2 Billion. Mundra already has two container terminals, one operated by the Adani Group itself and the other by DP World, together handling well in excess of 1.5 Million TEUs a year and with a combined capacity approaching 3 Million TEU. One hopes that the Adani Group might have ambitions in both containers and coal at India's deepest port, Vizhinjam being even deeper and better located than Mundra. The second consortium seems to be more focused on the construction aspect of the project which could be worth over Rs 2000 Crores in Phase One alone, and would bring in a specialist port/terminal operator if awarded the tender (unless they already have one already onboard).

All well and good, but there are a few troubling issues as well, which have come to the fore with VISL belatedly posting on its website crucial documents related to the feasibility study of the port (Yes, those were completed a year ago but were finally posted, you guessed right, AFTER the bid process was over! Genius, huh?!). To put it as succinctly as possible, the consultants appointed at great cost to promote the project seem to have taken a less rigorous and far more pessimistic view in many areas, than even a layman like yours truly. This definitely needs some looking into, because these very reports could determine the success or failure, at least of this round of tendering. And hopefully, this won't end up being a post-mortem analysis. There were over 600 pages of reports to be read in all, including a market study, a technical options report and a preliminary project plan, all of them highly technical in nature. So what follows is the result of a quick review, by someone who's not a marine engineer by training, so do bear with me as I make my comments.

Where did all those containers go?

When the latest edition of the tender started, VISL started floating some traffic estimate numbers for the project. 2.8 Million TEUs in 2044, for example. Wait a second, 2044?? Why were the latest numbers less than half of what the winning bidder in the last round, Lanco, had estimated within a shorter time span and well below what the original project consultants L&T-Ramboll had put down? I was left wondering whether the current market research consultant, Drewery, had missed out a zero here or there. On closer examination of the market study, it seems there are several points of departure from what would be logical sound assumptions. Firstly, the estimate of Indian GDP growth seems pretty conservative, considering the fact that there is already a pronounced shift in economic power towards India and China. Even accounting for the current hiccups in the global economy, the outlook over the medium and long term should be far more robust than what the study predicts. This in turn, affects the growth rate of overall Indian container traffic, of which a portion will flow via Vizhinjam. Next, the report seems to underestimate the ability of a port with unbeatable draft and minimal operating costs to take traffic away from its competitors. Basically, little credit seems to be given to the way a highly dynamic market like container shipping operates.With significant sensitivity to shipping costs, containerized cargo tends to follow the least cost path and if Vizhinjam can offer equal facilities as competing ports such as Colombo and Dubai at a lower cost, container lines will naturally choose the port of total least cost.

At this juncture, the Market Study takes a very pessimistic view of how much traffic Vizhinjam can capture from Colombo, its main competitor, which currently handles about 40% of all container traffic to and from India. A rather circumspect traffic-cost analysis shows that Vizhinjam is at a $3/TEU disadvantage with respect to Colombo assuming existing tariffs (Pages 130 - 134). Not only is this margin a negligible 2% of the existing tariff at Colombo, it is clear that with significant advantages such as the landlord port model which allows initial capital costs to be spread out through Government debt support, minimal dredging requirements and exemption from the tariff constraints at major ports, Vizhinjam should be able to significantly under-cut Colombo in terms of handling costs. The report goes to make assumptions that Vizhinjam would be unable to attract cargo bound for West and North India (Page 176) since these would be delivered direct to the deep draft ports in Gujarat such as Pipavav and Mundra. To an extent this is correct since these are close to the industrial hinterland of North and Western India. However, when we consider the biggest container ships, with carrying capacities greater than 11,000 TEUs, they are unlikely to make more than one stop in a country. In this scenario, Vizhinjam allows them to offload containers in India with minimal deviation from the Suez - Malacca shipping route followed by these behemoths on their round trips from the US/Europe to East Asia. Thus, it is likely that at least some of this cargo will be transshipped at Vizhinjam. Furthermore, the study also harps about Colombo's distance advantage to ports on the Indian East Coast, which seems rather suspect when one factors in the savings in distance that will be brought about by the Sethusamudram shipping channel (Of course, assuming that the ghosts of Ram's mythical simian army don't stop it permanently!). Finally, Vizhinjam has the added advantage of geo-political safety as far as Indian container traffic is considered which no foreign port can guarantee (least of all Colombo, which happens to be in the same country where the Chinese are almost done building what will be a pseudo-Naval base!).

Despite all this, Drewery estimates that Vizhinjam will only be able to capture only about 12 - 15% of the total transshipment potential available to Vizhinjam and Colombo (Page 196), due to their superiority over other regional ports such as Tuticorin and Cochin. And this is after Vizhinjam offers sizable discounts to Colombo's tariff! One wonders why this should be so? If Vizhinjam is cheaper, is on the Indian mainland and has the same, if not better connectivity, to Indian ports, why should it not be able to draw a much greater share of transshipment cargo away from Colombo. The report makes some vague reference to the fact that Colombo has greater "hinterland" cargo than Vizhinjam and hence can create bigger parcel sizes for shipping lines. However, an examination of the tables given in the report (Pages 179 - 180) shows that Sri Lanka's own hinterland volume is less 5% - 10% of India's, which means that lines that choose to transship at Vizhinjam instead of Colombo would not lose a critical volume of cargo. Moreover, if Vizhinjam provides a lower cost option, there is no commercial reason why cargo from Sri Lanka should not be transshiped at Vizhinjam although Drewery very conveniently rules it out citing some unspecified "feeder costs".

Even if we take Drewery's report at its face-value, the transshipment volumes for South and East India - which Vizhinjam could most effectively target - is 5 Million TEU in 2015, 8.5 Million TEU in 2020 and 20 Million TEU in 2030. With an effective tariff structure, one can assume safely that Vizhinjam should be able to target 20% - 25% of this traffic, even if it cannot split the honors evenly with Colombo. This means that the projected transshipment traffic for Vizhinjam should be 1.0 - 1.3 Million TEUs in 2015, 1.7 - 2.2 Million TEUs in 2020 and 4 - 5 Million TEUs in 2030, which is much closer to the original L&T Ramboll/Lanco estimates.

At this juncture, one needs to call into question the veracity, intent and sincerity of the report by Drewery, which fails to be aggressive or bullish with its container volume estimates, which is the need of the day when a Billion dollar bid process is under way. Instead, it uses rather circumspect logic to generate a pessimistic estimate of the port's potential. This fact is made painfully evident, when one sees that the only first-hand data survey conducted for the study was in Cochin (Page 168), not among global shipping lines or at competing hubs such as Colombo or Singapore. Somehow, that doesn't sound quite reassuring. And no, the bad news doesn't end here.

And how about the rest of the port? 

Having read through the dismal figures about container traffic in the report, if any bidder does get to the rest of the cargo forecast, he or she would be at a loss to find precisely that, non-containerized cargo, in the report. If this report is to be believed, Vizhinjam is unlikely to ever see bulk cargo of any kind such as coal and petroleum, although it does offer up dribbles of cashew and timber as scant consolation. The report then goes on to deep-six (pardon the nautical pun!) ship repair and leaves some vague recommendations for the equally trumpeted cruise market. Despair not, let's take a second look at these areas.

Drewery starts off by predicting that Vizhinjam would be a non-starter as far as coal, one of the world's most voluminous bulk cargo items, is concerned (Page 212). Firstly, the report says that there are no thermal power plants, steel plants or cement plants in and around Trivandrum. Well, that doesn't exactly require an expensive consultant to discover, does it? And to make sure that no one asks an inconvenient question such as "What if we build a port based thermal power plant?", the report quashes any likelihood of a coal-fired power station by saying that plentiful natural gas from the LNG terminal in Ernakulam and the KG Basin would erase any need for coal. Unfortunately for the second assumption, there are a few inconvenient truths sticking out. First, coal continues to be cheaper than gas, as pointed out in this report by the International Energy Agency and which is the reason behind the Government of India going ahead with nine Ultra Mega Power Projects (UMPPs), all with capacities of 4000 MW or more and all fired by coal.Second, imported LNG is extra costly, and the LNG terminal at Ernakulam is already struggling to find customers. Thirdly, the KG basin gas is already in short supply, even if we choose to ignore current supply problems.The demand for energy in India is rapidly increasing. A recent report by KPMG states that power consumption in China is about 1800 KWh/person while in India it is only about 750 KWh/person (to say nothing of the 15,000 KWh/person in the US!). This means that even to reach a figure comparable to China, India would need to add about 100,000 MW of power generation capacity in the next few years. While some of this will be renewable, nuclear and gas-based power generation, it is evident that the bulk will have to come from coal-fired stations which account for over 70% of current installed capacity. Since Indian coal production is capacity constrained and Indian coal is of relatively poor quality, a significant portion of the new power demand would have to fueled with imported coal, which is one reason many of the UMPPs are located near deep-water ports like Mundra and Krishnapatanam. These allow for the import of vast amounts of coal in giant coal carriers with capacities exceeding 200,000 tons. Almost all of India's coal imports will come in from Australia, Indonesia and South Africa (now you understand why the Adanis bought that coal port we talked about in the beginning!) The last inconvenient fact for the market report is that it is easier to transmit electricity than transport coal, which means it is best to generate the power as close to the coal supply as possible and then dispatch the electricity via the National Grid to wherever it is needed. Hmmm, so which is the closest deep-water port in India to the mines of Australia and Indonesia? No prizes for guessing, it is Vizhinjam with over 18 m of natural depth and located on the Southern tip of the subcontinent. 


Considering all this, the potential to set up a UMPP somewhere in the vicinity of Vizhinjam doesn't sound like an impossibility (the key issue would be finding the 850 - 1500 acres of land needed for one of these giants) and indeed as Kerala, despite being a coastal State, has as of yet not applied for a UMPP, this is a very viable proposition. A UMPP in Kerala would incur the least cost for import of coal as it is closest to the coal sources and this could lead to a cost advantage for the project with power possibly being evacuated through the 440 KV line of the Power Grid Corporation of India Ltd (PGCIL) already ready at Trivandrum, which is meant to draw power from the Koodankulam Nuclear Power Plant. A UMPP would need the import of over 12 - 15 Million Tons of coal annually via Vizhinjam. While it can be argued that this is a very aggressive scenario considering the sensitivity around the environment in Kerala as well as the relative scarcity of land, it should have been included in the report as a possibility for a potential bidder to consider, as Mundra Port may already have done on their own (or so we may hope!). After all, a near-permanent solution to Kerala's power woes and a Rs 20,000 Crore investment in the power project would be a powerful incentive to cobble together the land necessary for the project in a rural corner of Trivandrum district.

Next, the report moves on to petroleum traffic, namely crude oil and petroleum products (Page 233). Once again, it makes the stellar observation that there is no oil refinery in Trivandrum. Duh?! It continues to exclude any potential for future oil refining operations or even for product import by saying that existing ports such as the ones at Tuticorin and Ernakulam will continue to  handle such cargo. Well, to me, it seems like Vizhinjam has all of Southern Kerala and at least 3 major districts of TN as a direct hinterland where it has distance advantages over its neighboring ports. Moreover, it will have tariff advantages being outside the restrictions of the major ports' tariff regime. Here lies a clear case for import of petro products such as petrol, diesel and kerosene currently shipped via truck or train. Moreover, it is folly to rule out a refinery in the region, because there are two clear potential areas of demand for such a project. The first, and the simplest, is the vast hinterland of Southern Kerala and most of the Southern half of TN, which is currently served by refineries in Chennai and Ernakulam. A new refinery that uses Vizhinjam as a crude import terminal will be able to meet the growing demand of this region, which includes rapidly growing cities such as Trivandrum, Madurai, Trichy, Tirunelveli, Tuticorin and Kollam, at lower costs than the existing refineries. Secondly, the field of contract refining/export-oriented refining is gaining traction world-wide as consuming regions such the US, East Asia and Europe impose strict restrictions which make setting up new refineries there very difficult and open the way for strategically located refineries to process crude from sources such as the Middle-East and then send the products by tanker to the end markets. This is a successful business model by Reliance's world-beating Jamnagar complex as well as by Singapore, the tiny island being the world's third largest refining hub after Houston and Rotterdam. A sizeable refinery (a 600,000 barrel per day unit would need about 500 acres of land, about the same as the Technocity project has) could be set up somewhere in Trivandrum district or even in the neighboring districts of Tirunelveli or Kanyakumari where land is in relative abundance. Attached to the only port in India capable of handling VLCC/ULCC traffic WITHIN its basin (as opposed to Single Point Moorings far out at sea), a port that lies right on the world's crude oil artery, the refinery would have significant cost advantages and a major export market in South and East Asia, as well as further out, even to the US West Coast, in addition to the extensive hinterland as mentioned above. Again, this is an optimistic scenario but one which needs to be mentioned in a unbiased report so that prospective bidders can do their own numbers on its viability. Drewery's report makes no mention of this, the only saving grace being that it mentions that a major international firm had evinced interest in setting up a petroleum storage terminal in Vizhinjam and that a major oil company was interested in establishing bunkering operations.
One of Singapore's many refineries. Image:

Now, given the fact that about a third of all the world's shipping traffic passes by just ten nautical miles or less from Vizhinjam, on the Suez/Gulf - Malacca route, one would be forgiven for thinking that a world-class ship repair/building yard would be an attractive proposition at Vizhinjam. In fact, there have been a lot of noise made in the recent past about a Central Government initiative for a shipyard at Poovar and for the public-sector Cochin Shipyard Limited to set up a world-class yard, for the first time, at Vizhinjam. 

Drewery's report mentions all of Vizhinjam's advantages - location on the shipping channel, deep draft and then plays up its apparent disadvantages - competition from Dubai and Singapore, lack of trained manpower, humid climate, "labour problems" in Kerala (huh?, weren't these guys supposed to be on our side?!) and lack of international air connectivity to bring in spares. It doesn't take an Ivy League degree to understand that there is no dearth of trained and experienced manpower in Kerala and India because I would wager quite a bit on the fact that the majority of workers at the yards in Dubai and Singapore are Indians! Humid climate....well, it's the same climate as one sees in Singapore, day for day. Labor troubles, let me not even get into that. Trivandrum Airport already has 3 dedicated freighters a week with connections to the Mid-East hubs and Hong Kong and this can easily be stepped up if equipment needs to be imported for the ship yard. It suffices to say that India has significant advantages in labor availability and supporting manufacturing facilities (ranging from world-class steel plants to engineering companies) which could make it a world-leader in ship repair/building just as the Koreans and the Chinese have become in very short order, and this is evident from the plethora of private yards which have come up, including SKIL's yard at Pipavav and L&T's complex near Chennai. The report spends six or seven pages (Pages 291-297) on this subject but abruptly stops without a conclusion or recommendation. And there is more to come on this!

There has been a lot of talk about the potential for cruise operations at Vizhinjam not least of all because it happens to be located in the district which attracts the most foreign tourists in Kerala and is located close to a shipping route used by over 300 cruise ships every year. Unfortunately, the report pays lip-service to the subject and leaves nothing other than a table (Page 290) listing some figures for traffic estimates (which looks quite arbitrary, changing by as much as 50% in some years!) as well as some disheartening anecdotes of failure among cruise lines in India, most recently the collapse of Louis Cruises' venture at Ernakulam. It's a pity that such a high-potential area (more for the tourist industry than the port itself) has been given scant attention, perhaps the report makers should have been sent a copy of the comprehensive report on the subject prepared by my better half, a few years ago!

The report concludes with an analysis of the prospective tariffs and revenue streams from the port, which is again quite conservative. For example, it assumes that Vizhinjam will forever have to offer a hefty discount to Colombo to survive, which is counter-intuitive because once significant traffic is established at Vizhinjam, there is no further need to be sub-par with Colombo or any other port. At this point, the port can afford to charge tariffs that are revenue-neutral. Of course, the report makes no mention of any significant non-container revenue stream as we had discussed previously, whereas it would have been prudent to include this in a "High Revenue" scenario at the end.

A "clean and green" port......Huh?

The Preliminary Project Report for the Vizhinjam deep-water port has been prepared by Royal Haskoning and it must be said that they have done a fine job, at least as far as the technical aspects of port design are concerned. That said, there are a few surprises in there as well. After an exhaustive review of the site conditions (Pages 1-23), the report comes up with a set of vision key words for the project, based on the Drewery report
  • Green and Clean
  • Efficient
  • Competitive
  • Attractive for Tourism
  • "God's Own Port"
One is left wondering whether this is the project report of a $ 2 Billion deep-water port or a tourist resort! I am an environmentalist at heart and I love words like "green and clean", but that has different connotations in different contexts, a clean port is not the same as a clean operating theater, is it? We don't want a dirty, polluting port at Vizhinjam but we certainly do want a viable one! 

And there is certainly a major question raised about the viability of the project when the report proceeds to axe three key areas of potential operations - coal import, petroleum and ship repair based on the need to have a "Clean and Green Port"! (Pages 26-27). A port is a port is a port, gentlemen. While we can deploy technology such as dust suppression equipment, oil containment booms, effluent treatment, use of electric power instead of diesel wherever possible and noise reduction, a port will never be as pretty or as quiet as a beach resort. However, most of this noise and visual impact (cranes, containers and hulking ships) will be contained within the port's boundaries. The port itself is located in natural bay and is not even visible from up and down the coast. The only reason that Haskoning quotes to keep the "non-green" operations out is to make the port "tourist friendly". Cruise operations are glamorous but typically add little direct economic value and sacrificing major revenue earners such as coal import and ship repair/building for this is economic suicide. Moreover, major cruise terminals such as the ones in Singapore and Port Klang (both of which I have personally been to) are located right in the middle of major ports which handle all types of cargo. As long as a world-class cruise terminal is available to let fussy cruise passengers disembark and embark in air-conditioned comfort, they are not much bothered by whether containers or coal is being unloaded close by.

Star Cruise Terminal at Port Klang Photo: Tan Tiong Kee at Panaramio
Consequently, these areas of operation are excluded from the port master plan which seems rather truncated from earlier versions prepared by L&T Ramboll (Pages 51-52), while the development of the 2nd and 3rd phases has also been slowed down over a longer total development time-line. I wonder how much of this will finally be left up to the winning port operator, because it will be the ultimate judge of the traffic potential of the port. Because the project is currently being pursued in the "Landlord" model where the Government is responsible for almost all the civil work - breakwaters, quay, backup area and connectivity - and the operator is only responsible for the terminal infrastructure and operations, one wonders whether the expansion of the port will be determined by the operator or the Government or both?
This is a key area of uncertainty left by the third report, by the project's main consultant, the International Finance Corporation (IFC). In its report (Page 62), IFC states that in the Landlord model the Government would be responsible for the long-term master plan of the port as well as for executing all civil work through EPC contractors, which includes even the later phases of expansion of the project. Later on, the report states that GoK should consult the winning operator about the final design (Page 76). This will be critical in preventing issues at a later stage. GoK has appointed one of the world's leading engineering and PMC firms, AECOM, as the project's EPC consultant and this a  step in the right direction, although it is not clear how the final design would be developed from the work done by Royal Haskoning - whether AECOM would do this through its own in-house design team or a sub-consultant or a separate contract would be handed out by GoK. Operators will have the right to take up the 2nd and 3rd phases of the terminal, but will not be able to seek financial support from GoK as they can for Phase 1. This can be read into to mean that the operator can trigger the 2nd and 3rd phases of expansion whenever it feels that a traffic threshold has been attained and GoK would then be bound to issue the requisite EPC contracts. There is also an interesting clause by which the operator can take over the lucrative EPC contract if it bids and is within 15% of the lowest bidder, and then agrees to match the bid. This gives it a leg-up in the case of the EPC bid which is estimated to be worth over Rs 2000 Crores for Phase I alone, and may be an additional reason why a contractor like Welspun Leighton has been so keen on bidding.
A key final concern is that the RFQ/RFP process does not call for the operator consortium to have an actual terminal operator as a member at the time of the bid, only a commitment to bring in a qualified operator within a fixed time period of being awarded the bid. Although Mundra Port or Leighton Welspun, whoever wins, should be able to secure a capable operator, it would have been a much more robust proposition if the container terminal operator had been made a mandatory part of the consortium. As can be seen from the market report, the strength of the terminal operator will be a crucial determinant in the success of the project, at least early on, as it will need to have strong linkages with one or more major lines to wrest them away from Colombo. A operator-line combination like AP Moller Terminals, a sister concern of the world's largest shipping company, AP Moller Maersk, would have been ideal. However, APMT already operates terminals in Colombo and Mundra, and may not be committed to the project. There are alternatives such as Singapore's PSA or like Hyundai and MSC which also have their own lines. In the current scenario, GoK has little control over the capability of the terminal operator as long as it meets the minimum qualification criteria which are not very daunting.
All in all, the combination of reports submitted by IFC and its consultants seem to underplay the potential of Vizhinjam. None of these reports were challenged by IFC or VISL before being adopted. Perhaps VISL doesn't have the expertise to do so, but isn't that their job? These reports could have and would have been challenged by any citizen who had a few hours of time to spend in analyzing them, even without the benefit of years of maritime experience. Unfortunately, despite one of VISL's bosses over the last few years personally proclaiming to me that all reports would be published on VISL's website as soon as they were available, this eventually happened well after the final bids were received! If I was given to believing in conspiracies, which I generally am not, it wouldn't be very far fetched to wonder whether the reports were spiked to scare all interested parties off or to clear the field in favor of one or more parties. At best, they seem like rushed-up jobs (even ignoring glaring mistakes like Balaramapuram being called "Balrampur" in one place and Trivandrum's top industry being identified as "handlooms" and Ernakulam's as "IT" when the former contributes 75% of Kerala's IT exports) which are very conservative in nature and fail to make any effort to capture the real potential of the Vizhinjam project and hence fall far short in their intended purpose of attracting investors.

Proponents of the report may argue that it is best to err on the side of caution but I say that to be over-conservative, at a stage where the project is trying to attract investment in a globally competitive industry, is a very risky strategy indeed. A project report should talk about the upside as much as it cautions about the possible downsides. Vizhinjam has been and will be an aspirational project. If people like the former rulers of Travancore, Sri M.V. Raghavan and Sri. M. Vijayakumar had not dared to dream of a deep-water container transshipment terminal where today only a fishing harbor exists, we would never have come this far. By not daring to push the boundaries of Vizhinjam's potential, I fear that we may now have put up yet another speed-breaker for a project which has had to survive numerous rounds of sabotage by vested interests near and afar.
Little wonder then that out of 12 qualified bidders, only 2 put in bids. One hopes that one of these two will take Vizhinjam from being a sleepy fishing hamlet to one of the region's busiest ports. If not, this looks like a mighty poor investment of the Crores invested in the services of these international consultants and yet another resounding slap in the face of the practice of having career civil servants, instead of qualified industry professionals, run multi-Billion dollar infrastructure projects.
Fingers crossed!