Puducherry port defies ecology, economics
On October 18, 2004, the Puducherry government issued an advertisement inviting consultants to undertake a feasibility study for the construction of a new port. The advertisement read: "The notice is issued only to elicit an
eoi (expression of interest) in undertaking a feasibility study for Pondicherry Port development and does not constitute a binding commitment from the government of Puducherry to any or all firms in the subsequent selection process."
Down To Earth has examined the process of awarding the project through documents in its possession. Tendering procedures seemed to have been followed more in the breach than their observance. This was, perhaps, unsurprising, given the cavalier manner in which established environmental regulations were dumped and the land acquisition process handled.
Coast unclear
Port development is not constrained by the coastal regulation zone (
crz) notification of 1991, amended in 2001. So any development activity can be camouflaged under that rubric. Among other things,
crz rules prohibit any form of land reclamation for commercial activity including developing housing and commercial complexes, shopping malls, hotels and multiplexes. In Puducherry, the promoters calls these "permitted activity", essential to make the project financially viable. The concession agreement says "permitted activity means all activities that is permissible within the site and shall include development of land for residential, commercial, recreation, tourism purposes and any allied or incidental activities". The
eia report says that an entertainment/recreational centre and three and four star hotels are planned as part of the port project. The detailed project report says a hotel, offering facilities for water sports, and villas and apartments could be developed (see box:
Developers' defence).
The
crz notification says changes of landscape should be prohibited.
The National Institute of Port Management (
nipm), Mamalapuram, which was appointed by the Pondicherry government on August 4, 2005, as a consultant for port development, submitted a report that disagreed with the detailed project report about whether "permitted activities" could actually be allowed under
crz rules. The report said: "As this area is coming under the
crz, the proposed development activity which falls within 500 metres of restricted zone may not be possible on environmental considerations."
crzs are classified into four categories. The three documents relevant to the development of the port--the
eia, the detailed project report and the concession agreement--do not mention the category to which the port project relates. The
eia also failed to provide data relating to the location of leisure development, the height of planned buildings and distances from the sea for the planned structures. The phrase "permitted activity" also raises questions about double standards. "In 1999, the government had planned an assembly hall and also laid the foundation stone. But when it came to know the hall would have violated
crz regulations, the idea was dropped. However, the government has not objected to the developer's proposal to build 50-m-high buildings that are against
crz regulations also," says former tourism minister K Laxminarayanan, the Cassicade
mla from the Pondicherry Makkal Congress.
Prime land
A total of around 160 ha will be required to set up the new port. Of that, 62 ha belonging to the old port has already been handed over to the consortium consisting of the land of the walled port area to the immediate south of the town, land to the south of the Aryankuppam estuary and another swathe of land that includes the existing quay, breakwater and lighthouse. Another 43 ha is being acquired from private landholders: land from Thengathittu and a small islet in the Aryankuppam estuary will be part of this. Another 55-odd ha will be reclaimed from the sea. The Puducherry government has offered this land to the developers for peanuts. The concession agreement says the old port area and acquired land (105 ha) have been leased out for 5 paise per sq ft per year. The reclaimed land will be leased out for Rs 1,000 a year. According to Laxminarayanan, the port deal is actually a land scam. "The rate for the leased land is atrocious. Similar leases have been given to industrial estates around Puducherry, but the rents are as high as Rs 10 to Rs 20 per sq ft," he says. The municipal councillor of Thengathittu, Bhaskaran, opposes the government despite being a member of the ruling Congress, in particular the plans to acquire land from his village. "The government is offering people of Thengathittu Rs 15 per sq ft of land while the market rate is as high as Rs 5,000 per sq ft," he says. "Even if the government pays the village the existing rates they will be unwilling to part with their land."
A number of questions have been asked about the real motive of the developers. Is it truly a port development project, or as civil society groups allege, a systematic plan to grab land for real estate development? The way the phased project has been rejigged gives these questions greater significance. While the detailed project report says the cruise liner dock and associated leisure activities will be part of the third phase, between 2010-11, in the
eia report the consortium has brought this forward to the first phase, to be concluded by 2009.
Public uninvited
Given the controversial circumstances, it should come as no surprise that the government almost tried to bypass the public hearing, which is mandatory under the centre's
eia notification. There was no central clearance before the assets of the old port were handed over, either. Two weeks after that, on February 14, 2007, the government set up a hearing. Reports said a group of 200 villagers from Thengathittu had gone to attend the meeting. When the police stopped them from attending it, violence broke out. Some villagers, including an
mla, managed to get into the meeting hall after people gathered outside demanded that if the authorities would not allow the villagers to attend the hearing, government representatives would have to listen to grievances outside. Once inside, they shouted they had been illegally prevented from voicing their concerns. Amidst the confusion, the hearing was adjourned.
On March 24, a delegation of Puducherry citizens met chief minister N Rangasami. It included Thengathittu villagers, members of Pondy
can and the Puducherry Peoples Protection Committee, and fisherfolk groups. The chief minister assured them port assets would be taken back, land would not be acquired from Thengathittu and an expert committee would be set up. None of these promises have been kept.
According to Senthil Babu of Pondicherry Science Forum, the government had just made a show of taking back port land, later handing it back to the developers. "The promises were only made by the government to pacify citizens ahead of the March 27 rally. On March 24, 2007, the developers vacated the port land but on March 29 they were back again."
A senior government official said a circular was prepared by the government on March 27 to take back the land but lieutenant-governor Mukut Mithi has not signed it yet.
Tender mercies
After the advertisement for the feasibility study for the port was issued, 27 firms applied, of which four, D S Constructions, Apollo Infrastructure Projects, Larson and Toubro and Ipco Menang, also sent proposals to develop the port. On January 19, 2005, the government shortlisted D S Constructions and Apollo to prepare the feasibility study. Meanwhile,
spml, which had not even been shortlisted for the feasibility study
, reconfirmed its interest in developing the port in a letter received by the chief secretary's office on February 8, 2005, and signed by Rumneek Bawa, who had been the chief executive officer (
ceo) of D S Constructions till January 19, 2005, when it was shortlisted. As
ceo of
spml, Bawa sought time with port minister Valsaraj and chief secretary C S Khairwal to make a presentation.
Apart from Bawa's change of loyalties (he has since moved on), two things revealed by the letter stand out. First,
spml had expressed its interest in developing the port in a letter dated October 6, 2004, that is, even before the advertisement for the feasibility study had been published. Second, despite not having been shortlisted it had been asked to make a presentation as a consultant, in which the company had taken no interest, leading to the reconfirmation of its interest as a developer.
On March 11, 2005,
spml made the presentation to Valsaraj and Khairwal and in a letter dated June 3, 2005, the office of the chief secretary offered
spml the project of developing Pondicherry Port. The letter also said: "This offer is based upon the fact that in your presentation you have mentioned various port development projects undertaken by your associates." What was overlooked was that
spml had no experience in developing ports till then. It was asked to submit a detailed project report.
The director of ports, S C Sundaresan, had, in fact, written to Puducherry's law department on April 5, 2005, pointing out the need to follow prescribed procedures. On May 11, 2005, he was shunted out.
On August 3, 2005,
spml requested permission from the Puducherry government to allow
oml as a partner. Like
spml, oml had no expertise in developing ports. Significantly, as the
spml letter stated, it
did specialise in constructing shopping malls and amusement parks.
Not viable
nipm analysed the consortium's detailed project report and in November 2005 submitted its report. Summarising the
nipm findings, the new port director, B Ramakumar, wrote that the port would be financially unviable: "
nipm after conducting a financial analysis have stated that the project is not at all financially sound even assuming that the government would provide the necessary infrastructure indicated and grant all the concessions listed out by the developers."
nipm analysed the detailed project report for the port and found it depended on too many variables. While the port was mainly supposed to handle bulk cargo--coal, petroleum, oil and lubricant products, crude oil, iron ore pellets, iron and steel, and cement--it would also have to rely heavily on cargo diverted from neighbouring ports--Enore, Tuticorin, Chennai, Cochin and New Mangalore.
The
nipm report concluded that "no proper estimation of individual traffic to Pondicherry Port has been done". It further said: "In short, the traffic forecast has not been carried out methodically nor the proper analysis has been made to estimate the possible/probable traffic through the port."
Karaikal Port, being developed by the Puducherry government, will also cut into the profits of Pondicherry Port. It will handle 4 million tonnes of cargo in the first phase of its development, which will begin in 2009. Though the Pondicherry Port developers wanted this project stalled, the Karaikal port was in an advanced stage and dropping it was not possible.
All in a day's work
Even though
nipm had strongly recommended that the project be shelved, the Puducherry government decided to sign an agreement with
spml. On January 21, 2006, the cabinet cleared the detailed project report for the Pondicherry Port, which was also cleared on that day by the lieutenant governor. Again on the same day, a circular was sent by the undersecretary for ports to all government departments concerned, and
spml and
oml announcing this order. The Puducherry government and the consortium also entered a concession agreement through which a legal framework was created to proceed with the project, making January 21 an exceptionally busy day for all concerned. Through the agreement, the consortium renamed itself Pondicherry Port Limited (
ppl).
Utmost stealth
The selection of the promoters for the port had almost gone unnoticed, but C H Balamohan had tracked the process. In February 2006, as the honorary president of the Confederation of Pondicherry State Government Association, he had filed a case in the Madras High Court against violation of procedures in the selection. Balamohan had been trying to extract information since December 2005 when he filed an application under the Right to Information Act, 2005, with the department of ports. The one-page reply was less than satisfactory.
On January 13, 2006, he wrote to Mithi, apprising him about the facts but this letter went unanswered. In February, he filed a writ petition in the high court seeking an order to stop the development of the port. Balamohan says that till the court case was filed, the government was not divulging information to the public. In his petition, he sought an order quashing the concession agreement and cancelling a circular of January 24, 2006, handing over port assets to the developer. In an order dated August 10, 2006, the court did not find any mala fides in awarding the project to
ppl but directed the Puducherry government to ensure all clearances from the centre including those from the Union ministry for environment and forests (
moef) on the environmental impact assessment and coastal zone regulations, before development could begin. The court also barred
ppl from pursuing real estate development as part of the port project.
Balamohan alleges that the government has not followed the court order. On February 1, 2007, the assets of the old port were handed over to promoters. "On February 18, 2007, the promoters demolished a wall on the port premises, though they were not supposed to take up any activity before a public hearing and without consent from centre," Balamohan says. The demolition prompted a violent demonstration outside the port on February 20. Balamohan appealed the high court order in the Supreme Court in April 2007.
Sweet deal
Citizens are focussing on how Puducherry will gain. According to the concession agreement, the Puducherry government will get 2.6 per cent of the gross profit from port operatio