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BANGALORE: - The ambitious Sethusamudram ship canal project between India and Sri Lanka will get under way after the union cabinet vets it next month and ecological concerns are addressed, says Shipping Minister T.R. Baalu.

Baalu affirmed the government’s commitment to the Rs.20-billion ($434 million) project that envisages a 20-km navigation channel between India and Sri Lanka from the narrow Gulf of Mannar to the Bay of Bengal for the movement of cargo ships and cruise liners in the Indian Ocean.

"The union cabinet will consider the project in October for approval and allocate seed capital of Rs.500 million as the government’s share of investment in it," Baalu told IANS here.

He said the Cabinet Committee on Economic Affairs had cleared the project early this month and a special purpose vehicle (SPV) had been set up to execute it.

"Our ministry is studying the objections filed by fishermen and environmentalists to not only allay their apprehensions but also make provision for meeting their requirements," Baalu said on the sidelines of a review meeting of infrastructure projects in Karnataka.

The project work is likely to commence by this yearend and is expected to complete by 2007. Besides the central government, the Tamil Nadu government, the Shipping Corporation of India (SCI) and the Tuticorin Port Trust (TPT) will be the major stakeholders.

The SPV in the form of the Sethusamudram Corporation Ltd (SCL) will have an authorised capital of Rs.8 billion with a debt equity ratio at 1:1.5. The SCI and TPT will be investing Rs.500 million each for the dream project.

Four eastern ports such as the Chennai Port Trust, Ennore Port Ltd in Tamil Nadu, Vizag Port Trust in Andhra Pradesh and Paradip Port Trust in Orissa will also participate in the equity structure with Rs.300 million each. The Dredging Corporation of India (DCI) will also fund the project.

Once the 20-km canal is thrown open to traffic, hundreds of ships sailing from west to east will save on sailing by 36 hours and cut short distances by about 400 nautical miles.

A technical feasibility study and economic analysis conducted by the National Environmental Engineering Research Institute (NEERI) indicate that savings on cargo movement through the passage could go up to Rs.800 million annually.

Currently, about 2,000 ships from the Arabian Sea are made to go around Sri Lanka for sailing into the eastern ports of India annually.

"Before we open the canal for ships, we will factor the rich ecological and marine biosphere reserves of the coastal region. We certainly would not like to disturb the eco-balance in the short or long term," Baalu asserted.

Though the project had been pending for over five decades, the pressure of Tamil Nadu political parties, especially key partner DMK in the ruling United Progressive Alliance (UPA), has forced the centre to implement the project.

Baalu said abundant care would be taken to protect the marine life and the rich flora and fauna by building stringent safeguards.

"Though similar concerns were also expressed earlier when the Tuticorin Port Trust was set up way back in the mid-70s, the absence of any damage due to dredging activities on coral reefs or fish catch have proved an eco-friendly canal will protect the natural assets and give fillip to the socio-economic development of southern Tamil Nadu." (Indo-Asian News Service)