Religious questions and political battles aside, a key banker said there is just not enough money to demolish the bridge that Ram may or may not have built.
The bank in charge of securing the loans for the proposed Rs 2,400 crore channel said that the Sethusamudram project may never happen - in the absence of required money.
"I don’t think this project will ever see the light of day because there is no money,” said Ashish Kumar Singh, Vice-President of capital markets at Axis Bank Ltd. Axis, formerly UTI Bank, was appointed “loan arranger” for the project in 2005.
Since its inception in 2004, costs have skyrocketed to at least Rs 4,000 crore, interest rates have crawled higher and old loan terms have lapsed.
Singh said the project is languishing because no company will dredge the channel for cheap and Indian dredging companies don’t have the required equipment.
Even before the first dredger began its work in 2005, costs had already spiralled to more than Rs 3,500 crore, Singh said.
The loan sanctions, valid only up to Rs 2,400 crore, lapsed. To secure more money, Singh said, Sethusamudram Corp. Ltd would have to return to the drawing board, draw up new reports, sit with parliamentary committees and receive fresh approval.
For the last few months, Hindu groups have staged protests, forcing the Supreme Court to halt the project until a January hearing.
The Ram Setu has figured in the Bharatiya Janata Party’s plans for coming back to power.
Shipping minister TR Baalu has said he plans to carry on, regardless of public opinion. Though Baalu did not return a call for comment.
Not so long ago, before protest defined the future of the Ram Setu, the project promised to shorten shipping routes and help revive Tamil Nadu’s economy.
In late 2005, Axis had little problem selling the idea to lenders. When the bank hit the road to drum up interest, "It was the most attractive thing out there," said Singh.
"It had great visibility, people were excited... and there was a buzz around it."
While Axis was raising debt, Sethusamudram floated tenders for the dredging work, which constitutes 80 per cent of project's total job.
While the Dredging Corporation of India was nominated to do a quarter of the work, the rest of the dredging was to be done by third-party contractors, according to the project's economic feasibility study.
Bidders included South Korea-based Hyundai Dredging International, Netherlands-based Van Oord International and Belgium-based JanBe Nul. None of the companies returned calls for comment.