Chabahar Port Capacity Remains Largely Untapped

EghtesadOnline: Currently, only 10% of the capacity of Chabahar Port are being utilized, the deputy industries minister for commercial affairs said.

News ID: ۷۴۸۳۷۰

07 September 2019

"This is while Chabahar has the capacity to host vessels weighing more than 80,000 tons. The port also boasts a wide range of port equipment, including grain suction machines and giant cranes," Hossein Modarres Khiyabani was also quoted as saying by ILNA, adding that Chabahar Port has the potential to become a major trading hub in Iran.

"Plans are underway to divert ships carrying essential goods to Chabahar to give impetus to operations in the strategic port," he said.

According to Ravanbakhsh Behzadian, an official with Ports and Maritime Organization of Iran, a total of 11 million tons of essential goods have been imported into Iranian ports during the first five months of the current fiscal year (March 21), Financial Tribune reported.

“The volume of imports indicates a 67% rise compared with last year's corresponding period,” Behzadian was also quoted as saying by IRNA.

Ever since the imposition of sanctions by the United States on Iran last year dubbed as "toughest ever", the Iranian government has directed its trade regime toward the import of essential goods, mainly food products and pharmaceuticals. On the other hand, imports of what the government deems as non-essential goods, mainly those with domestic counterparts, have been restricted or banned.

The sanctions were imposed after the US unilaterally walked out of the nuclear deal Iran signed with five other world powers. The deal, formally known as the Joint Comprehensive Plan of Action, was signed in 2015 and implemented a year later. It saw years of international sanctions lifted against Iran. In exchange, Iran agreed to limit the scope of its nuclear program.

The US sanctions have targeted Iran's trade by obstructing its commercial exchanges with world powers.

Imam Khomeini Port has been at the forefront of essential goods imports. Close to 7 million tons of essential goods, including barley, corn, oilseeds, sugar and vegetable oil, were unloaded at the port in Khuzestan Province during the same five-month period, indicating a 64% increase year-on-year.

Incentivizing Traders to Use Chabahar

To incentivize traders to use Chabahar, according to Khiyabani, who doubles as CEO of the Islamic Republic of Iran Shipping Lines, merchants and businesspeople who use Chabahar's Shahid Beheshti Port will enjoy a 30% discount in customs duties.

Khiyabani was recently quoted as saying that the government has made it mandatory for two major state-run companies to unload and transport their import cargoes via the facilities of Chabahar's Shahid Beheshti Port terminal rather than their traditional destination at Imam Khomeini Port.

The first phase of Shahid Beheshti Port was inaugurated in December 2017 by Iranian President Hassan Rouhani, opening a new strategic route connecting Iran, India and Afghanistan.

The inauguration of the first phase of Shahid Beheshti Port (out of a total of five development phases) has tripled Chabahar's capacity to 8.5 million tons (equal to that of all the northern ports of the country). It allows the docking of super-large container ships (between 100,000 DWT and 120,000 DWT) and increase India’s connectivity with Afghanistan.

India Global Ports Limited has been tasked with administering and running the Shahid Beheshti terminal. IGPL is planning to invest $500 million over the next 10 years and equip Chabahar with special loading and unloading harbor machinery.

Early in January, India’s Shipping Ministry officially announced that the country has officially taken over the Chabahar operations.

"This step marks the beginning of a long journey. India has written a history with its engagement in Chabahar and is now leading the regional cooperation and joint efforts to support landlocked Afghanistan. This is the first time India will be operating a port outside its territories," an Indian government's statement read.

India, Iran and Afghanistan signed a pact in May 2016, which entailed the establishment of transit and transport corridor among the three countries using Chabahar Port as one of the regional hubs for sea transportation, besides the multimodal transport of goods and passengers across the three nations.

Lying along the Sea of Oman, Chabahar, located in Sistan-Baluchestan Province, is considered a gateway to golden opportunities for trade, especially by India, Iran and Afghanistan with Central Asian countries.

Chabahar has recently extended its loading and unloading operations to a round-the-clock basis, to handle the unprecedented bulk of cargo ships docking at its wharves.

Last November, the United States announced that it would grant a sanctions waiver for the Iranian-Indian port project at Chabahar. The exemption from the new round of US sanctions is an opportunity for the development of transit via this port.

The port project will not be impacted by the US decision not to renew exemptions that let eight countries, including India, to buy Iranian oil without facing American sanctions, a US State Department official said.

Chabahar-Zahedan Railroad Construction on Track

Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei has authorized the government to withdraw funds needed to complete the railroad project connecting the southeastern port city of Chabahar to the eastern city of Zahedan bordering Afghanistan and Pakistan, both in Sistan-Baluchestan Province, from the National Development Fund of Iran, the country’s sovereign wealth fund, Minister of Roads and Urban Development Mohammad Eslami has announced.

The 610-kilometer railroad project from Chabahar to Zahedan got off the ground in the fiscal 2010-11, only to come to a halt for three years due to lack of resources. The execution of the project resumed in the year ending March 2015, after a change of contractor, the news outlet of Iran Chamber of Commerce, Industries, Mines and Agriculture reported.

However, the project has made less than 40% progress, says Abbas Khatibi, the deputy head of Construction and Development of Transportation Infrastructure Company of Iran, adding that “so far, 17,000 billion rials [$149.12 million] have been invested in the rail line. A total of 40,000 billion rials [$350.87 million] are needed to complete the project.”

Khatibi noted that the project, which includes the Zahedan-Khash-Iranshahr-Chabahar rail route, needs four years to be completed and will come on stream provided resources are allocated as per schedule.

His comments come, as Eslami vows to inaugurate the project by March 2022.

At the current funding level, it would take more than 10 years for the project to come to fruition, says parliamentary representative from Chabahar, Abdulghafour Iran-Nejad.

An estimated 40,000 billion rials (more than $350 million) are needed to connect Chabahar to Iran's railroad network whereas the budget law of fiscal 2018-19 envisioned only 1,000 billion rials ($8.77 million) for this large-scale project, he added.