a controversy is raging in the media over the financing of the Sethusamudram Shipping Canal Project. Several news sources, quoting a bank in charge of securing loans for the project, said that the project "may never happen" since the costs have gone through the roof and the old loan terms have lapsed. When contacted by Down To Earth, the 'loan arranger', however, said that it had been misrepresented by the press.
News reports quoted vice-president of capital markets at Axis Bank Ltd (formerly uti Bank), Ashish Kumar Singh, as saying that the project is stalled since no company will dredge for cheap and that loan sanctions have lapsed. To secure more money, the Sethusamudram Corporation Limited will have to start all over again, he was reported to have said. Axis Bank was appointed 'loan arranger' for the project in 2005. The news reports also said that the government had not contacted the bank about new loans.
Singh, however, told Down To Earth that he had been misquoted. He said that Axis Bank had not been actively involved with the project since 2005 because the government had not contacted it.
"We have nothing to do with the project at present. We have not arranged any loans and don't know if we are still going to be the loan arranger. Whatever dredging has been done by the Dredging Corporation of India (dci) must have been paid for by the government," Singh said. Asked why the dredging costs were badly underestimated, he said he did not know the reason and added that the estimates were done by Larsen & Toubro Ltd.
V Sriramalu of dci also could not give any information on the funds for the project. "dci has billed the Sethusamudram Corporation Limited [entrusted with the project implementation work] and we do not know where the money is coming from," he said.
When contacted, officials at the Sethusamudram Corporation said that the managing director has gone on indefinite leave.
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