Policy

India, Iran to sign Chabahar port contract in Mumbai next month

Mamuni Das |Nayanima Basu | | Updated on: Jan 19, 2018

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Indian Ports Global to develop and operate two berths in phase I

After a prolonged wait, India and Iran are set to ink the final agreement on the development of Iran’s Chabahar port.

The agreement, which relates to the phase I development of the port, will be signed during the Maritime India Summit 2016 slated for April 14-16 in Mumbai.

Iran’s Port and Maritime Authority has awarded a 10-year port development project to Iranian firm Arya Bandar, which will in turn sign an agreement with Indian Ports Global Pvt Ltd (IPGPL).

IPGPL, a joint venture of Jawaharlal Nehru Port Trust (JNPT) and Kandla port, will install the equipment to develop two berths, and operate them for a 10-year period before handing the equipment back to Iran, sources told BusinessLine .

IPGPL will operate the two berths — one for containers and the other for a multipurpose cargo facility — through an SPV, which will have an Iranian partner. All cargo except petroleum products will be handled in these terminals.

Iranian partner The Iranian partner will be selected by a Committee of Secretaries from the Indian Ministries of External Affairs, Finance and Shipping, and NITI Aayog CEO Amitabh Kant.

The Centre is presently discussing the draft agreement with all the line ministries.

Though India is making a strategic investment, the port will be commercially operated under Iranian rules, sources said. The External Affairs Ministry will provide $85 million to IPGPL to acquire the modernisation equipment and another $5 million as bank guarantee for the project. EXIM Bank has also extended a $150-million line of credit to the Iranian Port Authority for the project.

The draft agreement was discussed with Iranian authorities during the India-Iran Joint Commission Meeting held here in December, followed by two more meetings between the Iranian authorities and the Ministries of External Affairs and Shipping.

Second phase India is also eyeing participation in the second phase of the project, which includes the development of a 500-km rail link between Chabahar and Zahedan, the capital of Sistan-Baluchistan province. This will directly link the port to Central Asia.

Apparently, India is keen on private sector participation in the second phase, and is anticipating a surge of Chinese investments with the lifting of trade sanctions.

However, officials also noted that the plan is at a nascent stage and much depends on the price of gas that India is eyeing from Iran.

Talks on this, and also on developing the second phase of Chabahar port, are expected to gain momentum during Prime Minister Narendra Modi’s proposed visit to Iran later this year.

Published on March 15, 2016
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