Logistics

With US sanctions waiver, Chabahar Port set to commence operations by month-end

P Manoj Mumbai | Updated on November 07, 2018 Published on November 07, 2018

Boost for trade The volume of trade between India and Iran will increase substantially with the commencement of operations at Chabahar Port

The port will provide India connectivity to enhance trade with land-locked Afghanistan and Central Asia

 

Decks have been cleared for India to start operating the Chabahar port in Iran by the end of November after the US granted exemptions to the port from the sanctions it had imposed on the Persian Gulf nation from Sunday.

“We are targeting to start operations at Chabahar by the end of the month,” a Shipping Ministry official said, ending months of uncertainty over the fate of the India-funded project.

The waiver has also re-opened the possibility of paying Iran in Euros, said the official, who declined to be named.

Temporary arrangement

India has picked Bandar Abbas-based Kaveh Port and Marine Services company to run the port on a temporary arrangement for 18 months till a full-time manage, operate and maintain (MOM) contractor is finalised by India Ports Global Pvt Ltd, the Indian state-owned entity that is implementing the project.

The start of commercial operations at Chabahar has been delayed because of difficulties in paying Kaveh Port and Marine for the services due to banking issues on transfer of funds.

“To overcome this hurdle, Iran had agreed to accept payment in rupees. But, with this changed scenario, whether they will insist on taking payment in Euros, we’ll have to see and discuss that with Iran and sort it out. Making payment in Euros should not be a problem now since Chabahar has been exempted from the sanctions; so banking transactions should not be an issue,” the official said.

“The waiver granted by the US will allow us to ask Kaveh to start operations; this is the first step,” the official said.

The fine print of the US waiver terms will also help India decide whether to dilute the tender conditions for selecting a full-time Indian MOM contractor to run Chabahar.

India Ports Global (a 60:40 joint venture between Jawaharlal Port Trust and Deendayal Port Trust) and Aria Banader Iranian Port signed a deal in May 2016 to equip and operate the container and multi-purpose terminals at Shahid Beheshti – Chabahar Port Phase-I with capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease. Cargo revenues collected will be shared by India and Iran as per an agreed formula.

Located in the Sistan-Baluchistan Province on Iran’s South-eastern coast (outside Persian Gulf), Chabahar port is of great strategic importance for development of regional maritime transit traffic to Afghanistan and Central Asia.

The first phase development of Chabahar port will have a container terminal with two berths of 640-metre quay length and a depth of 16 metres and a multi-purpose terminal with a quay length of 600 metres and draft of 14 metres. The port has a total back-up area of 70 hectares.

India Ports Global has ordered four rail-mounted quay cranes (RMQCs) for a combined $29.8 million from Chinese port crane maker Shanghai Zhenhua Heavy Industries Co Ltd (ZPMC) and 14 rubber-tyred gantry cranes or RTGCs for about $18 million from Finnish crane maker Cargotec OYJ for erecting at Chabahar port.

Advantage India

Chabahar will provide India the much-denied connectivity to enhance trade with land locked Afghanistan and Central Asian nations.

India's participation in the development of Chabahar Port will provide India an alternative and reliable access route into Afghanistan utilising India’s earlier investment in Zaranj-Delaram road built in Afghanistan, and also a reliable and more direct sea-road access route into Central Asian Region.

Chabahar Port has the potential to become a regional transit hub for Afghanistan and eastern Central Asian Countries. It is expected that volume of trade will increase substantially on the commencement of operation at Chabahar Port, the Ministry official said.

It will improve bilateral trade with Iran — currently pegged at $16 billion — and provide an opportunity to Indians to avail low-cost energy for various industries in the free trade zone in Chabahar.

Published on November 07, 2018

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.