India to participate in development of Iran’s Chahbahar port

The union cabinet at its meeting chaired by Prime Minister Narendra Modi on Saturday gave its approval for signing a memorandum of understanding (MoU) with the government of Iran for development of the Chahbahar port in Iran

The framework inter-governmental agreement on developing the Chahbahar port, which is located in the Sistan-Baluchistan province on Iran's south-eastern coast, is to be finalised by the governments of India and Iran.

Under the MoU, an Indian joint venture company will lease two fully constructed berths in Chahbahar port's Phase-I project for a period of ten years, which could be renewed by ''mutual agreement''.

The JV company will invest $85.21 million for equipping the two berths within 12 months 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 port and Maritime Organisation (P&MO) without any payment at the end of the tenth year.

The Indian side can form a JV that could include one or more Iranian companies subject to the approval of the P&MO.

The Indian and Iranian sides could enter into subsequent negotiations for participation in the construction, equipping and operating of terminals in Phase-II on BOT basis, subject to the Indian side's satisfactory performance in Phase-I.

The Iranian side will make efforts to provide free trade zone conditions and facilities at the port.

The union cabinet also approved a proposal to constitute a JV or other a special purpose vehicle (SPV) comprising the Jawaharlal Nehru Port Trust (JNPT) and the Kandla Port Trust (KPT) and if required a local Iranian partner and/or an Indian private sector partner to serve as the vehicle for India's participation in the development of the port.

The cabinet also approved annual revenue expenditure of $22.95 million to support operational activities of the Indian JV.

Iran's Chahbahar port located in the Sistan-Baluchistan Province on Iran's south-eastern coast is a port of great strategic utility for India. It lies outside the Persian Gulf and is easily accessed from India's western coast.

India's presence at the Chahbahar port would give it a sea-land access route into Afghanistan through Iran's eastern borders.

From Chahbahar port using the existing Iranian road network, one can link up to Zaranj in Afghanistan which is at a distance of 883 km from the port and then using the Zaranj-Delaram road constructed by India in 2009, one can access Afghanistan's garland highway thereby establishing road access to four of the major cities of Afghanistan; Herat, Kandahar, Kabul and Mazar-e-Sharif.