"The issue (allowing Chinese participation at Vizhinjam) is being taken up at the highest level. But, it will be the Prime Ministers' Office which will have the last word on the issue," M Vijayakumar, Kerala law and shipping minister said.

His party has pitched for the project by taking an 18-party delegation to the PMO in September. And, with former Kerala minister, AK Antony occupying a crucial position of defence minister, the state government is hopeful that the matter will be taken up seriously by the Centre.

The port, according to experts, has the potential to change India's fortune by making it a major trans-shipment (feeder cargo) destination. This is because, the port lies hardly 10 kilometres away from the main global shipping route and by virtue of this it will be able to attract feeder cargo of major ports like Singapore Port, Dubai or Colombo Port.

With a natural draft of 23 meters, it would be able to entertain big vessels just like other global ports and could well hit neighbouring trans-shipment ports. Experts say nearly 30-35% cargo handled by Dubai port or 20-25% cargo handled by Singapore Port may get diverted to a fully functional Vizhinjam port.

It may also cut transportation costs for consumers and exporters. Currently, freight costs for Indian exporters average 11.4% as against a world average of 6.1%.

But the Vizhinjam project has got entangled in the security issue controversy involving India and China.

Early this year, the project was awarded to a consortium of three companies — Zoom Developers from Mumbai and two Chinese firms, Kaidi Electric Power/Kaidi and China Harbour Engineering Company. Chinese were the majority partners in the consortium.

The final nod from the state government was to accompany certain permissions from the central government including security, customs and environmental clearance.

But with security agencies raising concerns over the presence of China Harbour, the project is yet to take off. Kerala has asked the successful bidders to extend the validity of their bid to January. "A final call on the project would be taken after Hu Jintao's visit," said a Kerala state official.

Meanwhile, the Indian consortium member, Zoom Developers, is trying to bail out the project by even proposing to change the consortium partners. it has also given two legal opinions in its favour — one by Mulla & Mulla and other from former chief justice of India, MH Kania, which says the state government can change the consortium members in the wake of security clearance being denied to existing partners.

Source : The Times of India - India Business, Nov 21