Many naval hydrographers and experts suggest that the project is unlikely to be financially viable or serve ships in any significant way. The savings for ships that originate from Kanyakumari or Tuticorin is between 10 and 30 hours. For ships from other destinations like the Middle East, Africa, Mauritius and Europe,the average savings by using this canal is just 8 hours.
At the present tariff rates, ships from Africa and Europe will lose $ 4,992 on every voyage, as the savings in time for these ships are considerably lower that what is calculated in the DPR. This loss is significant as 65% of the projected users of the canal are those from Africa and Europe. If tariffs are lowered to a point where ships from Africa and Europe will not lose any money from using the canal, the IRR of the project falls to 2.6%! This is a level at which even public infrastructure projects are rejected by the government.
