Technical Feasibility and Economic Analysis of 

Proposed Sethusamudram Ship Channel Project

by

National Environmental Engineering Research Institute

Nehru Marg, Nagpur - 440 020

 August 2004

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Executive Summary

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Introduction

India does not have a continuous navigable route around the peninsula running within her own territorial waters due to presence of a shallow reef called “Adam’s Bridge” at Pamban where the navigable depth is only about 3m. Hence all the ships from west to east and from Tuticorin Port to the east have to go round Sri Lanka entailing an additional distance of more than 254-424 nautical miles and 21-36 hours of sailing time.

The proposal for providing a navigable route has been drawing the attention of the Government of India for a long time. The first proposal was mooted during 1890 and nine proposals were formulated between 1890 and 1922 for dredging a canal across the narrow strip of land mostly through the Rameswaram island to connect the Gulf of Mannar with Palk Bay. However, after 1922 the proposal was dormant for a long time till the country attained independence.

 After independence, five proposals were drawn up for the development of Sethusamudram Ship Canal Project during different times. The recent one being by M/s. Pallavan Transport Consultancy Services Ltd., Chennai during 1996. The index plan is shown in the figure. 

The Ministry of Shipping, Government of India has now identified the Tuticorin Port Trust as the nodal agency for the implementation of the Sethusamudram Ship Canal Project. The Tuticorin Port Trust has retained National Environmental Engineering Research Institute (NEERI), Nagpur to conduct the Environmental Impact Assessment study for the project. The institute in its EIA study dispensed with idea of a canal through Pamban island and suggested a channel linking Palkbay and Gulf of Mannar through Adams bridge. It also recommended creation of additional depth in Palk Bay/Strait to create channel connecting Palk Strait with Bay of Bengal. This report addresses technical feasibility and economic analysis of proposed Sethusamudram Ship Channel Project.

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Present Proposal

All the earlier proposals selected the route, particularly in the Gulf of Mannar area passing through Mandapam / Rameswaram etc. involving the dredging of a canal mainly through the land portion. These alignments were so selected as to optimize the cost of dredging. An analysis of the earlier proposals reveal that with each proposal, the canal was shifted eastwards mainly due to the apprehensions of the local population. The report prepared by NEERI in 1998 had considered modification in route proposed by steering committee. However due to apprehension that route around Dhanushkodi might require to cut through Coral reef, the route suggested by steering committee was considered the best choice.

The Environmental Impact Assessment Study carried out by NEERI has revealed that, in view of the sensitivity along the coastal stretch of Gulf of Mannar harbouring Marine National Park, a navigation route keeping a minimum distance of 6 to 8 km from Van Tiu near Tuticorin and more than 20 km from Shingle Island in Adam’s Bridge approach area is the most suitable one. The alignment of the proposed channel is shown in Fig. 2 which also shows earlier selected routes. The recent hydrography/ hydrogeology study in Adam’s Bridge area indicated that sub-bottom profiles comprise soft and hard sand and not the coral reef as envisaged earlier. The bore hole data is shown in Fig. 3.

The proposed Sethusamudram Ship Channel will have following two legs :

·             one near Point Calimere called the Bay of Bengal channel and

·             the other across the Adam’s Bridge

The Bay of Bengal channel traverses the Pak Bay wherein the sea bed is reported to be mostly soft to hard clayey - sand in nature. However presence of hard strata below the soft sediment is envisaged in data collected by National Hydrographic Office (NHO), Dehradun. The present proposal envisaged creation of navigation channel to suit different draught requirement viz. 9.15, 10.7 and 12.8 m requiring dredging depths of 10 m, 12 m and 14 m respectively. For 12.8 m draught channel width will be 500 m whereas for 9.15 and 10.7 m draughts, channel width will be 300 m. 

Based on hydrography data collected by NHO (Fig. 4) it is observed that navigation depths in Palk Bay are restricted to about 12 m only. The total length from Adam’s Bridge to Palk Strait is about 145 km. In the event of proposal for 12.8 m draught requiring 14 m depth, dredging will require to be carried out in entire Palk Bay area to create a channel of 500 m width generating huge additional dredge spoil of about 170-180 million m³. Dredging all along the length of the channel in Palk Bay will be detrimental to ecologically sensitive area of this region. It would also involve heavy additional expenditure on dredging and disposal of dredge spoil. Thus keeping in view environmental sensitivity and economic viability the proposal for 14 m depth (12.8 m draught) is not evaluated. Thus channel depth of only 10 m and 12 m are considered for economic evaluation. The channel will be dredged with a bottom width of 300m to a depth of -10mCD or -12mCD in Palk Strait and adjoining parts of Palk Bay to achieve the required depth over a stretch of 36 and 18km respectively. In the Gulf of Mannar, navigational depths (more than 12 m) will be used from Tuticorin Port to Adam’s Bridge Area. A 20 km long channel with a bed width of 300 m. will be dredged to a depth of -10mCD or -12 mCD catering to vessels drawing a draught of 9.15 or 10.7m respectively. Proposed alignment of channel is shown in Fig. 5. Stretch requiring dredging is given in Table 1 

Table 1

actual dredging requirements are calculated in Table 2.

Table 2

Dredging Requirement

Quantity of Dredged Material for 10m depth (9.15m draught) and 300m width Channel

Quantity : Million Cu.M   

Quantity of Dredged Material for 12m depth (10.7m draught) and 300m width Channel

Quantity : Million Cu.M   

CSD     :             Cutter Suction Dredger

TSHD    :            Trailor Suction Hopper Dredger

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Provisions in the Present Proposal

Though option for both 9.15 m and 10.7 m draught were evaluated, study carried out by shipping corporation of India for estimating traffic potential at 7, 9 and 11 draught recommended that a minimum draught of 10.7 m be kept to make channel viable. The savings based on expected number of transits through proposed channel for various considered draught is given in Table 3.

Table 3

Expected number of transits through the Sethusamudram Channel

Rs. in Crores

The proposed channel will have a bed width of 300m which will provide a safe width for navigation of two way channel. The channel will have side slopes of 1:3. 

A Control Station equipped with VTMS is proposed to be located at Rameshwaram Island between Dhanushkodi and Koil Nagar villages with an additional Control Station near Point Calimere.

Provision has been made for necessary navigational aids which include lighted Fairway Buoys, Channel Marker Buoys, Racons etc. to assist navigation round the clock.

Provision has also been made for necessary flotilla to assist navigation consisting of tugs, pilot launches, survey launches, buoy laying tender etc.

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Estimated Cost

The cost estimates have been worked out for both 9.15 and 10.7 m draught. It was observed that estimated cost of project for 9.15 m draught (10 m depth) is Rs. 1050 crores with dredging costs of about Rs.779 crores. However estimated costs for 12 m deep channel is Rs. 2000 crores with dredging costs of around Rs. 1680 crores. The capital investment is to be done in 4 years. The cost estimates are given in Tables 4 and 5 for 10 m and 12 m depth channel respectively.

Table 4

Capital Cost for 10m Depth and 300 m Width Channel

* Dredging costs will increase if blasting is required to be done in Palk Strait area to achieve desired depth L.S. : Lump Sum

    * Upward revision in total cost is envisaged if there is change in dredging costs  

     L.S. : Lump Sum

Table 5

Capital Cost for 12m Depth and 300 m Width Channel

* Dredging costs will increase if blasting is required to be done in Palk Strait area to achieve desired depth L.S. : Lump Sum

    * Upward revision in total cost is envisaged if there is change in dredging costs  

     L.S. : Lump Sum

The costs may face upward revision as it has been observed that in more than 50% of the dredging contract there has been very large cost overruns mainly due to poor soil investigation. Investigations carried out in this study are based on sub-bottom profile except for three borings in Adam’s Bridge and there is apprehension that hard strata will be encountered in Palk Bay/Palk Strait area. If bottom strata turn out to be rock, the dredging costs will change drastically, as blasting might be required.

Cost of maintenance dredging for 12 m depth channel will be Rs. 550 lakhs per annum and annual operation and maintenance cost will be Rs. 1500 lakhs. The break up is shown in Table 6.

Table 6

Annual Operation and Maintenance Cost

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Cost Benefits

The summary of benefits due to proposed channel is given below :

Direct Benefits

The direct benefits are

•    to the canal authority

•    to the shipping company

•    the channel will give sheltered water route from the western ports to the eastern ports

•   Average time saved per voyage is 25 hours (average saving in distance 300 nautical miles and speed assumed as 12 knots)

•    Average amount saved per voyage is Rs. 5.36 lakhs (2003)

Indirect Benefits

Some of the Indirect benefits are:

•      The channel would save 25 hours of voyage and due to the lower consumption of fuel, there will be considerable savings of foreign exchange. 

•      The ships transporting coal between Tuticorin and Haldia normally take 4 days and the saving of 25 hours per voyage translates into 20% of the voyage time and in turn can make 20% more trips.

•      The channel will be of very great importance from national defense and security point of view.  The revenue from naval and coastal traffic will go up adding to indirect benefit

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Economic Viability

 Based on the NPV method of appraisal, the following internal rate of return are obtained.

Taking into account an interest rate of 9% per annum on the capital employed on the basis of the rate of government lending to ports, the project starts having surplus from 19^th year of its operation as per the Cash Flow statement. The Project will have a cumulative surplus of Rs. 3,138 crores at the end of 25^th year after commissioning of 12 m deep channel as shown in Table 7.

Table 7

Sethusamudram Ship Channel Project
Cash Flow Statement