Chabahar Port Development Delayed

EghtesadOnline: India’s long-running plan to upgrade and operate maritime facilities at Chabahar Port in Iran faces fresh delays after an initial bidding process to select a private operator for the project proved futile despite vigorous government efforts to spur interest.

News ID: ۷۴۲۷۸۰

16 July 2017

Authorities are now planning to retender the contract, which involves management, operation and maintenance services, after Essar Ports Ltd., one of the two prequalified Indian bidders, failed to fulfill security clearance requirements, leaving Adani Ports and Special Economic Zone as the sole bidder.

“As a single qualified applicant was left, the present RFQ [request for qualification] had to be scrapped,” Ministry of Shipping sources told JOC.com.

Mumbai-based Essar Ports is essentially a bulk terminal operator with facilities at six port locations in the country, according to information available on the company’s website.

APSEZ, which operates India’s biggest non-government cargo terminal at Mundra and a host of facilities elsewhere, has lately been pursuing global investment opportunities, Financial Tribune reported.

The first tender to choose a private partner for the Chabahar Port was floated in March, and barring APSEZ and Essar, all other companies that had previously expressed interest dropped out of the race. The lack of interest is seemingly tied to growing investor concerns over the commercial viability of the project because of limited traffic potential, relatively high investment in terminal operating infrastructure and systems, upfront fees and high risk factors prevailing in the region.

To encourage private participation, authorities are now looking to rework tender guidelines, including those related to management fees.

Chabahar, which is in the Sistan-Baluchistan Province on Iran’s southeastern coast, is roughly 550 nautical miles from Kandla Port and about 790 nautical miles from Mumbai. The port deal is strategically significant for New Delhi, as Chabahar would help it gain direct access to Iran by bypassing Pakistan.

The Chabahar Port plan, which was approved by the Indian government in October 2014, received a push when Prime Minister Narendra Modi announced a $500 million investment in the project during his visit to Tehran in May 2016.

India Ports Global Pvt. Ltd., a special-purpose company set up with equity participation from the ports of Jawaharlal Nehru Port Trust and Kandla Port Trust, is handling the project. Under terms of an agreement signed in May 2016 with Iranian authorities, IPGPL has offered to refurbish a 640-meter (about 2,100 feet) container-handling facility with deployment of new equipment, including four rail-mounted gantry cranes, 16 rubber-tire gantry cranes, two reach stackers and two empty handlers. In addition, it will upgrade a 600-meter multipurpose berth with six mobile harbor cranes, 10 forklifts and 10 trailers.

IPGPL has also guaranteed a throughput of 30,000 TEU in the third year of operations and 250,000 TEU in the 10th year.

That agreement called for an 18-month completion period for the first phase of the development, but with a fresh tender in the offing, the project is likely to be delayed considerably.