India Ports Global awaits deal to run Chabahar Port

India will operate two berths in Chabahar port with an investment of $85.21 million.

The Dollar Business Bureau

A joint collaboration between the Iranian and Indian private companies and, India Ports Global Pvt Ltd could establish a company to develop the Chabahar port situated in the Sistan-Baluchistan Province of south Iran. Prime Minister Narendra Modi is likely to sign the deal with Iran this month during his next visit. With the culmination of the project, a better access via the sea-land route to Afghanistan through Iran will be possible.

According to a source from the Ministry of Shipping, India Ports Global is likely to have an SPV (special purpose vehicle) to operate Chabahar port under Iranian rules. The company is yet to fix the equity shareholding pattern to operate the SPV. However, the spokesman said there are plans to have few more partners from India and Iran included the SPV.

The spokesman also said that lack of an agreement being signed between the two countries till now has delayed the process of finding partners in the SPV. Any company would first want to go through the deal that is signed with the Iranian government. No firm has confirmed the partnership as both the governments are yet to finalise the contract. He hoped that the contract with Iran will be signed with the Indian Prime Minister’s visit this month.

The EXIM Bank would provide a loan amount of $150 million to develop the Chabahar port. Through this port, it would become easy to reach Zaranj in Afghanistan, which is just 883 km from the port, via the Iran road network. From there, Indian exporters/importers can use Afghanistan’s garland highway to reach four trade significant cities of Afghanistan—Herat, Kandahar, Kabul and Mazar-e-Sharif.

During the first phase of Chabahar port, India will operate two berths with an investment of $85.21 million and annual revenue expenditure of $22.95 million, on lease for a decade. After completion of the lease term, the ownership can either be transferred to Iran or the agreement can be extended. The two berths would commence operations within 18 months from the date of signing the contract.

This project would be the first foreign venture for an Indian public sector port. India Ports Global is a joint venture between Jawaharlal Nehru Port Trust having 60% stake and the Kandla Port Trust holding the remaining 40%. There are 12 state-owned ports in India that hold more than 55% of the shipments from the country.

 

The Dollar Business Bureau - May 05, 2016 12:00 IST
 
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