Indian Ports Global to set up a company in Iran to run Chabahar Port

Bengaluru: India Ports Global Pvt. Ltd, a joint venture between Jawaharlal Nehru Port Trust and Kandla Port Trust, will set up a company in Iran with participation from private Iranian and Indian firms to develop and operate the port at Chabahar on the strategic southern tip of Iran.

The contract for the port project is expected to be signed by the two countries during Prime Minister Narendra Modi’s visit to Iran this month.

The Chabahar port project gives India a sea-land access route into Afghanistan through Iran’s eastern borders.

“The special purpose vehicle to be formed by Indian Ports Global to run Chabahar port will be a company under Iranian laws,” a spokesman for the shipping ministry said. “The shareholding pattern and the extent of equity to be held by Indian Ports Global is yet to be worked out. We may have one more Indian partner and some Iranian partners in the SPV. All that has to be seen,” the spokesman said.

The ministry spokesman also said that the task of identifying partners in the SPV has been delayed in the absence of a contract between the two governments. “Any company would like to see our contract with the Iranian government first. Unless that contract is finalized, it will be premature to pick partners for the project. Though we are on the lookout for partners, nothing concrete has come up,” the spokesman said, adding the government was hoping to sign the contract with Iran during the prime minister’s visit to that country.

Iran’s Chahbahar port, located in the Sistan-Baluchistan Province on Iran’s southern 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, it is possible to link up to Zaranj in Afghanistan, about 883 km from the port, and then using the Zaranj-Delaram road constructed by India in 2009, Indian traders 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.

In February, the cabinet approved a $150 million credit from EXIM Bank for developing the Chabahar port.

India will install equipment and operate two berths in the first phase of Chabahar port with an investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease. Ownership of equipment will be transferred to the Iranian side on completion of 10 years or for an extended period, based on mutual agreement. The two berths will start operation within 18 months of the contract being signed.

The Chabahar port project will be the first overseas venture for an Indian state-owned port. Jawaharlal Nehru Port, India’s biggest container port, holds a 60% stake in Indian Ports Global with Kandla port holding the balance.

India has 12 state-owned ports that account for about 55% of the country’s overseas cargo shipped by sea.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.