Corruption in India – Part III

The Pondicherry Port – A Cover-up for Illegal Real Estate Development

The Coastal Regulation Zone (CRZ) notification of 1991 issued under the Environment (Protection) Act 1986 places restrictions on industries, operations and processes in the CRZ areas (which extend up to 500 m from the High Tide Line (HTL) and the land lying between the Low Tide Line (LTL) and the HTL).

Some of the prohibited activities in the CRZ are:

  • setting up of new industries and expansion of industries except those directly related to waterfront or directly needing foreshore facilities.
  • any construction activity between the LTL and HTL except facilities for carrying treated effluents and waste water discharges into the sea.
  • land reclamation for commercial purposes such as shopping and housing complexes, hotels and entertainment activities.
  • mining of sand, rocks, and other substrata material.
  • manufacture or handling or storage or disposal of hazardous substances.
  • harvesting or drawing of ground water and construction of mechanisms within 200 m of HTL.

CRZ 1

Areas that are ecologically sensitive and important such as national parks, marine parks, sanctuaries, reserve forests, wildlife habitats, mangroves, corals/coral reef areas; areas close to breeding and spawning grounds of fish and other marine life, areas of outstanding beauty/areas rich in genetic diversity, historically important or heritage areas, areas likely to be inundated due to rising sea level consequent upon global warming and such other areas, as may be declared by the Central and State Government at the State or Union Territory level from time to time.

Pondicherry Port Limited (PPL), a consortium jointly owned by Subhash Projects & Marketing Limited (SPML) and Om Metals, signed a concession agreement with the Government of Pondicherry on 21 January 2006. The Pondicherry port development falls under CRZ 1. Port activities are permitted under CRZ 1, but real estate development is not. Based on the Environmental Impact Assessment report submitted by Halcrow Consulting India Limited (www.halcrow.com), the consultants for SPML, it is clear that the port, as proposed by SPML, is a cover-up for major real estate development on what will become prime beach-front property.

  1. SPML proposes a 20 million metric ton/year port “consisting of containers, liquid and general cargo, coal and iron ore, along with port associated facilities such as cruise terminal station & associated accommodation, retail area, offices, recreational centre, service apartments, and 3 & 4 star hotel for operators and tourists and others visiting the port”. To elaborate (quoting from the executive summary of the Environmental Impact Assessment report submitted by Halcrow, dated February 2006), the following essential development and facilities are planned along with the port expansion and modernization:
    1. Cruise terminal station and associated accommodation for cruise operators, tourists, and others.
    2. Meeting, incentive, conference, and exhibition center.
    3. Shopping/retail area for cruise , passengers, and other tourists.
    4. Offices for cruise, passengers, and toursits.
    5. Offices for various port operators, clearing and forwarding agents, and associated port business.
    6. Accommodation for the people associated with port directly and indirectly.
    7. Entertainment/recreational centre and area for people directly and indirectly involved in port operations and business.
    8. Parking area.
    9. Service apartments.
    10. 3/4-star hotel.
  2. Average traffic over the past 17 years has been 47,000 tons/year. No detailed local demand data has been provided by Halcrow.
  3. The project is not viable without the real estate component. However, as indicated above, hotels, shopping complexes, etc. are not permitted under the CRZ Act.
  4. “Facilities in the new port have been developed to cater for the forecast cargo demand [even though there is no demand forecast for the Pondicherry port] allowing for the maximum size that the land area including additional land to be provided by the Pondicherry Government and reclaimed land available for the port development can handle.” In other words, the port has been sized for the land to be made available to SPML, rather than the projected demand for the port.
  5. The port has been sized to the maximum amount of land to be made available. However, each phase of the four-phased project is dependent on traffic forecasts and financial viability, allowing the option for a much smaller port. The remaining land will be used for…?
  6. The project cost for this port is estimated to be Rs. 2700 crore – an unjustifiable number based on other port developments. With the JNPT port as a reference, this port should not cost more than Rs. 700 crore. The remaining Rs. 2000 crore be used for…?
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3 Responses to “Corruption in India – Part III”


  1. 1 Chanamunna February 16, 2008 at 7:09 am

    Socialists will always have problems with development. Nowadays they have mastered the art of raising the environmental bogey to try to stop every development project that doesn’t meet their bookish theories taught by white haired leftist intellectuals in damp college class rooms.

  2. 2 Scrapo June 16, 2009 at 5:53 pm

    While the possibility of the port being a cover for real estate is there, there is no way that a port can be built for 700 cr.

    Secondly, even though the MOU may allow building of hotels, etc., it is not allowed under CRZ regulatons. A single PIL filed in the supreme court will have the half built project put on hold for years as has happened in the past with other projects.

    The feasibility report is definately doctored or made by someone who does not know ports.


  1. 1 In Memoriam: Pondicherry’s Beautiful Sandy Beaches | memestream Trackback on December 10, 2016 at 5:56 am

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