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Business News/ News / India/  SPV for Sethusamudram project to be wound up
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SPV for Sethusamudram project to be wound up

Work on the project was stopped pending an apex court ruling on petitions against it

A Nasa photo of Adam’s Bridge, also known as Rama Setu. Dredging in the region was stopped by SC in 2007.Premium
A Nasa photo of Adam’s Bridge, also known as Rama Setu. Dredging in the region was stopped by SC in 2007.

The special purpose vehicle, Sethusamudram Corporation Ltd (SCL)—set up to build India’s ambitious Sethusamudram project—is all set to be wound up, said two people aware of the development.

This comes against the backdrop of the government initiating the process of selling its 63.75% stake in the Shipping Corp. of India (SCI).

Sethusamudram has been one of India’s most ambitious maritime projects, aiming to create a new shipping lane connecting the Gulf of Mannar and Bay of Bengal through the Palk Strait and Palk Bay. The project was to be financed through equity contributions from state-run firms, including SCI, which is under the administrative control of the ministry of ports, shipping and waterways (MoPSW).

According to a government document reviewed by Mint, a resolution “was passed for seeking additional grant of 115.72 crore from the Government to settle the dues of Dredging Corporation of India for the dredging works carried out in Sethusamudram Ship Channel Project and also a proposal to MOPSW for winding up of SCL along with fund position."

The Hindu Business Line newspaper reported on 29 December about the SCL set to be closed down.

Queries sent to the spokespersons of the ministry of ports, shipping and waterways and SCI weren’t answered till press time.

Sethusamudram was expected to shorten ship journeys between India’s eastern and western coasts. But dredging in Adam’s Bridge region, also known as Rama Setu, was stopped by the Supreme Court vide orders issued on 31 August and 14 September 2007 following petitions filed by individuals and groups. Vishwa Hindu Parishad-led groups opposed the project on the grounds it would destroy a rock and sand ridge created by divine hand as recounted in the Ramayana.

“Supreme Court’s final hearing on the matter was scheduled on 6th April 2018. However, the hearing has been withheld indefinitely," the document said.

“Work stands suspended since 17 September 2007 consequent to an interim stay by the honourable Supreme Court for carrying out dredging operations in Adam’s bridge area. Pending a final decision on alternative alignment, all the dredgers were withdrawn since 27 July 2009," according to the document.

Besides SCI, the project also saw equity participation from the Dredging Corporation of India and the port trusts of Chidambaranar, Paradip, Kamarajar, Vizag and Chennai. “GoI had constituted ‘SCL’ to raise finance and to undertake activities to facilitate operation of a navigable channel from the Gulf of Mannar to the Bay of Bengal through Palk Bay (Sethusamudram Ship Channel Project)," the document said. “As of FY 2016-17, SCI has invested 50 crore in this project," it added.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 16 Mar 2021, 06:11 AM IST
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