Even as work continues on the controversial Sethu Samudram project that aims to dredge a sea channel around the coast of India to reduce shipping times, costs are spiralling and the project is heading towards financial trouble. The government of India had promised Rs495 crore to the project when it was conceived in 2005.
The rest, about Rs1,900 crore, was supposed to come through fund-raising. The government has in an affidavit to the Supreme Court confirmed that it has spent Rs550 crore on the project so far and every day, authorities have to pay Rs76 lakh to keep six dredgers working at Palk Bay, where the channel begins its 90km journey around the Indian coast.
So far, only about 20-25% of the work is completed in this area, officials have confirmed. With lending rates increasing globally and banks unwilling to extend credit to this cash-strapped project without a government guarantee, it is not clear where the money to complete the project is going to come from. Sethu Samudram Corp. Ltd, the special purpose vehicle created to raise funds from lenders, did not return requests for comment.