India signs MoU with Iran on Chabahar Port

May 8, 2015 10:48 am Published by

India and Iran have signed a memorandum of understanding (MoU) for the development of the Chabahar Port in Iran, which was partially built by India in the 1990s, to provide a sea-land access route to Afghanistan bypassing Pakistan.

Chabahar is a free port (Free Trade Zone) on the coast of the Gulf of Oman and the only Iranian port with direct access to the ocean.

The pact, signed by the Union Minister for Shipping, Road Transport and Highways, Mr Nitin Gadkari, and the Iranian Minister for Transport and Urban Development, Dr Abbas Ahmad Akhoundi, would allow Indian and Iranian commercial entities to start negotiations towards the finalisation of a commercial contract under which Indian companies would lease two existing berths at the Chabahar Port and operationalise them as container and multi-purpose cargo terminals, sources said.

During his meeting with Mr Gadkari, the Iranian President, Mr Hassan Rouhani, said, “Resumption of Iran-India cooperation in the southeastern Iranian port city of Chabahar would lead to a new chapter in relations between the two countries.”

“The availability of a functional container and multi-purpose cargo terminal at Chabahar Port would provide Afghanistan’s garland road network system alternate access to a sea port, significantly enhancing Afghanistan’s overall connectivity to regional and global markets, and providing a fillip to the ongoing reconstruction and humanitarian efforts in the country,” a Ministry of External Affairs statement said.

The port will be used to ship crude oil and urea, which would help India save transportation costs, officials said.

India Ports Global

The project is expected to be developed by India Ports Global (IPG), the special purpose vehicle (SPV) of Jawaharlal Nehru Port Trust (JNPT) and Kandla Port Trust (KPT) set up to construct port projects abroad.

JNPT has 60 per cent stake in the SPV, with KPT holding 40 per cent. The Chairman of JNPT is the ex-officio Chairman of IPG and among its three Directors. The other two are the Chairman of KPT and a nominee of the Ministry of Shipping.

According to sources, IPG will also be involving private companies in the projects it takes up. They point out that being a government entity would likely make it easy for IPG to obtain projects, and experienced private players could be brought in with the requisite stake to develop the project.

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