Police launch probe against Puducherry port developer

Move follows letter from Union home ministry pointing out fraud committed by the private developer, Subhash Projects

By Anupam Chakravartty
Published: Wednesday 24 July 2013

image The project to redevelop Puducherry port has been mired in controversy from the very outset. Now police has launched an investigation against the port developer, Subhash Projects and Marketing Limited (SPML), at the behest of the Union Territory administration.

The move came following the directions from the Union Ministry of Home Affairs. The ministry wrote a letter advising the Puducherry administration to cancel the concession agreement. The ministry found that due diligence was not observed while signing the agreement and that procedures prescribed under various guidelines were not followed, which would have caused losses to the tune of crores of rupees to the public exchequer.

The joint secretary of Puducherry's port department, N Sumathi, in a letter to the police on June 26, this year complained that SPML committed fraud by appointing one of its own consultants, Halcrow, to conduct a feasibility study of the project. The letter further states that SPML started construction in February 2007, and demolished a government structure.
Green clearances not obtained

SPML has objected to the investigation, saying the matter is under arbitration. Last year December, SPML claimed Rs 1,511 crore damage from Puducherry administration. The Department of Ports has submitted a reply to arbitration panel, saying SPML tried developing the port without environmental clearances. “The port was planned in a haphazard manner, which ultimately became unviable. Further, there has been hardly any traffic since 1989 when the harbour came up,” says an engineer working with the port department.

Despite the Union Ministry of Home Affairs audit report finding several loopholes in awarding of contract to SPML, the Supreme Court while citing the Pondicherry (Laws) Regulation, 1963, said the Union Territory has powers over the port.  SPML on the other hand, wanted to pull out of the project, citing losses in commissioning the project).
The redevelopment of Puducherry port from a fair-weather port into a deep-water port has been stiffly opposed by environmental groups. A sustained campaign by Puducherry-based PondyCAN, a non-profit working to safeguard coasts from environmental pollution, brought about a sea of change in how the administration viewed the project. “The port project did not have environmental clearances. They illegally demolished a civil structure. The government was misled by the private developer and we are now taking a criminal action against the developers,” said Ports secretary, P L Meena.

Environmental and resettlement costs were found to be much higher which made the project non-viable. Had the administration leased the land to SPML, a loss of Rs 14.08 crores a year would have been incurred by the state exchequer. Land measuring 400 acres  (one acre equals 0.4 hectare) was allotted to SPML at the rate of Rs 2,000 per acre through a sweetened deal on a first-come, first-served basis, ignoring the flawed feasibility report, which had been prepared by one of  SPML’s own consultants, instead of an independent consultant.

According to the Ministry of Home Affairs audit report, beach erosion threatens communities along the beach because of the port. The report states that as a result of the construction of a harbour, six kilometres of the beach disappeared in 10 years. The report said that coastal currents were disrupted by the channels connecting the harbour. 


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