ANALYSIS. Enayam port: a booster for maritime trade or a redundant project?

Enayam, a small fishing hamlet in the southern tip of India, will get on to the international maritime map by 2020 if the Centre’s plan to establish a global container transhipment hub here succeeds.

After nearly two decades, the project has moved out of the drawing board.

Tamil Nadu already has three major ports — Chennai Port, Kamarajar Port in Ennore to the north of Chennai and VO Chidambaranar Port in Tuticorin. “With a fourth in Enayam, Tamil Nadu will be in an enviable position, and it will be difficult for other States to replicate,” said a shipper in Tuticorin.

However, stiff opposition from the locals, including a strong fishermen community, could scuttle the project. More importantly, the viability of the ₹27,570-crore project is a big question mark as a similar project is coming up at Vizhinjam bordering Kerala, just 35 km by sea from Enayam. Both the ports will compete for the same hinterland cargo.

“Why can’t the government spend money on developing an outer harbour at VOC port to attract large vessels? What’s the point of a port in between VOC and Vizhinjam? It will only kill VOC port.

“We saw a similar situation in Mumbai after JNPT came up and in Chennai port after Ennore,” said Joe Villavarayar of the Tuticorin Ship Agents Association. Vizhinjam port has all the advantages that Enayam has, he added.

The Centre says the Enayam project is critical for India’s trade, especially in the South, which annually loses around ₹1,500 crore transporting cargo via feeder vessels to transhipment hubs such as Colombo, Singapore and Port Klang, Malaysia. Mother vessels to destinations in the US or Europe don’t call on southern ports due to inadequate cargo volume and infrastructure. Enayam is 14 nautical miles from the Great East-West shipping route connecting Europe to East Asia.

That route caters to 80 per cent of southern India’s container trans-shipment cargo.  The availability of deep water (20 m contour) closer to shoreline (1.5 to 1.8 km) will minimise dredging and maintenance cost.

The port could attract major shipping lines and a global hub could lead to the establishment of new industries in the industrially lagging southern districts of Tamil Nadu, the government has said. An SPV will develop Enayam port with initial equity investment from Chennai, Kamarajar and VOC ports to create infrastructure such as dredging and reclamation, breakwater and connectivity. It will be able to handle triple E class container vessels and 120,000 Dead Weight Tonne Capesize solid bulk vessels.

While there is no reason given by government on change of location from Colachel to Enayam (10 km apart) there is heavy opposition among locals on this change. However, port sources said that shift was due to better rail and road access to Enayam than Colachel.

The Tamil Nadu government conceived the idea in late ’90s but the project did not move beyond the drawing board due to concerns over viability, opposition from fishermen/locals and land acquisition hurdles, sources said.

K Ravichandran, Senior Vice-President and Co-Head, Corporate Ratings, ICRA Ltd, said there is already surplus capacity for container handling in the southern region, with five major operating terminals at Chennai, Tuticorin, Krishnapatnam, Katupalli and Kochi ports. Two more are to be commissioned at Ennore port and at Vizhinjam.

Due to overcapacity and slowdown in EXIM trade, incumbents’ profitability has been squeezed.

Moreover, India has not yet been able to attract transhipment cargo in a meaningful way because of several challenges, more so in the southern region because of formidable competition from Sri Lankan ports with competitive tariffs.

Colombo is estimated to have handled around 5 million TEU in 2015 compared with 12 million TEU handled by all Indian ports and around 3 million TEU handled in southern India. “Tariffs are lower by 20-30 per cent compared with Indian ports,” said Ravichandran.

According to J Jasiah, spokesperson for the movement against the Enayam International Container Transhipment Terminal, Vallarpadam in Kerala was developed as a trans-shipment port but it operates with just 30 per cent capacity due to lack of cargo.

“So how will Enayam survive competition from Vallarpadam, Vizhinjam and Colombo?” he asked.