Govt creates cell for Iran's Chabahar port project

The government has set up a cell to accelerate work and monitor progress of the Chabahar port project in Iran, the shipping ministry's first overseas port project, so that it is completed within a deadline.

Last week, the union cabinet decided to set up a special purpose vehicle (SPV), with equity participation by Kandla Port Trust (KPT) and Jawaharlal Nehru Port Trust (JNPT).

After setting up the cell comprising representatives of the two ports and the ministry of shipping, a consultant would be appointed to prepare the memorandum of association, equity structure and the details of the SPV (See: India to participate in development of Iran's Chahbahar port).

JNPT is said to have nominated four officers for coordinating the work. JNPT and KPT will sign a contract with Iran's Port and Maritime Organisation for undertaking the project.

This will be followed by the appointment of a consultant to prepare a memorandum of association (MoA), articles of association and details of the SPV and formation of a steering committee for the project at the shipping ministry level before signing of MoU with Iran.

The SPV will build and ease two fully constructed berths in the first phase of the Chabahar port project for 10 years, which could be renewed by ''mutual agreement''. The JV will invest the money for equipping the two berths within 12 months, one as a container terminal and the second as a multi-purpose cargo terminal.

The Indian side will transfer ownership of the equipment to be provided through the investment to Iran's Ports and Maritime Organisation (P&MO) without any payment at the end of the 10th year.

In phase – II of the project, the Indian and Iranian sides could enter into subsequent negotiations for participation in the construction, equipping and operating of terminals of Chabahar port on a build, operate and transfer (BOT) basis, subject to the Indian side's satisfactory performance in phase-I.

Iran will make efforts to provide free trade zone conditions and facilities at the port.

Chabahar port, located in the Sistan-Baluchistan province on Iran's south-eastern coast, is considered strategically and economically important for India's exports to landlocked Afghanistan.

India, Iran and Afghanistan have an agreement on preferential treatment and low tariffs for goods moved through Chabahar port, which also has a free trade and industrial zone in its vicinity.

Given India's often hostile relations with Pakistan, the port could provide India an alternative route not only to Afghanistan, but also to resource-rich Central Asia.

Chabahar is also closer to India than the existing Iranian port at Bandar Abbas, which is about 380 nautical miles away from Chabahar.

India's presence at the Chabahar port - which lies outside the Persian Gulf and is easily accessed from India's western coast - would give it a sea-land access route into Afghanistan through Iran's eastern borders.

Using the existing Iranian road network from Chabahar port, traffic can be linked up to Afghanistan's Zaranj, which is about 883km from the port, and then using the Zaranj-Delaram road constructed by India in 2009, access Afghanistan's ''garland'' highway, thereby establishing road access to four of the major cities of Afghanistan - Herat, Kandahar, Kabul and Mazar-e-Sharif.

Besides, the development of the new port means more cargo and more ships calling at ports, creating more employment opportunities - both direct and indirect - for locals.

Kandla and JNPT have cash surpluses, a part of which can be deployed to develop port assets abroad and to grow their business.

Private sector groups such as Adani Group and GVK Group have already bought port assets abroad, mainly in Australia, as part of a larger plan to invest in coal mines and related infrastructure.