India's participation in the development of Chahbahar port in Iran
No: ----- Dated: Oct, 18 2014
India's participation in the development of Chahbahar port in Iran
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for the framework inter-Governmental Memorandum of Understanding (MoU) that is to be finalised by the Government of India with the Government of Iran. This inter-Governmental MoU will have the following main elements:-
i. An Indian Joint Venture (JV) 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”.
ii. The JV company will invest US $ 85.21 million for equipping the two berths within 12 months as a container terminal and the second as a multi-purpose cargo terminal.
iii. 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.
iv. The Indian side can form a JV that could include one or more Iranian companies subject to the approval of the P&MO.
v. 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.
vi. The Iranian side will make efforts to provide Free Trade Zone conditions and facilities at the port.
The Cabinet also approved to constitute a JV or other appropriate 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. Approval was also given for incurring annual revenue expenditure of US$ 22.95 million to support operational activities of the Indian JV.
India’s presence at the Chahbahar port would give it a sea-land access route into Afghanistan through Iran’s eastern borders.
Background
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.
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.