€300m Will Be Allocated to Chabahar-Zahedan Railroad From NDFI

EghtesadOnline: The Cabinet has decided to allocate €300 million needed to complete the railroad project connecting the southeastern port city of Chabahar to the eastern city of Zahedan near the border with Afghanistan and Pakistan, both in Sistan-Baluchestan Province, from the National Development Fund of Iran, the country’s sovereign wealth fund.

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21 September 2019

The decision came after Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei announced his authorization.

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 a lack of resources. The execution of the project resumed in the year ending March 2015, after a change of contractor.

However, the project has made less than 40% progress, according to Abbas Khatibi, the deputy head of Construction and Development of Transportation Infrastructure Company of Iran, according to Financial Tribune.

“So far, 17,000 billion rials [$149.12 million] have been invested in the railroad. A total of 40,000 billion rials [$350.87 million] are needed to complete the project,” he said.

“The project, which includes the Zahedan-Khash-Iranshahr-Chabahar rail route, will be completed in four years and become operational, provided resources are allocated as per the schedule.”

His comments come as Minister of Roads and Urban Development Mohammad Eslami vowed earlier this month to inaugurate the project by March 2022.

The railroad to Zahedan is crucial, as it is vital for connectivity to landlocked Afghanistan via Chabahar. The port in Iran’s Sistan-Baluchestan Province is strategically important for India too, allowing it access to Afghanistan while bypassing Pakistan.

After connecting Chabahar to Zahedan, the railroad will be linked to Zaranj in Afghanistan. Hence, when the Afghan cargo arrives in Zahedan, it can be transported by a 1,380-km railroad to Chabahar and then shipped to India.

Dissatisfaction With India's Tardiness

India, Iran and Afghanistan signed the trilateral transit agreement or Chabahar agreement in May 2016. India took over operations at the Shahid Beheshti Terminal at Chabahar Port in December last year through the special purpose vehicle India Ports Global.

Expressing dismay with the pace of progress being shown by India on the Chabahar-Zahedan rail link, Iran’s Ambassador to India Ali Chegeni recently told reporters: “Our Indian colleagues are not on the same page. We would have been happy to have seen our Indian brothers being much more active in Chabahar.”

“Chabahar is the golden gate. Time is moving quickly. There is a lot of will, but the will to act is missing,” he added.

Noting that Iran had been expecting credit lines for the rail project, he said Iran decided to go ahead with the project by using its own resources because of lack of interest shown by India.

That India is going slow on Chabahar as well as other connectivity projects linked to it has been evident for some time. It slashed the budget allocation for the crucial port being slashed by one-third in the 2019-20 budget. The US sanctions on Iran have clearly had a debilitating impact on Indian moves on Chabahar.

The port has got a sanctions waiver, but only for providing humanitarian assistance to Afghanistan.

Indian and Iranian officials on Monday discussed the full operationalization of a trilateral transit agreement for using Chabahar Port as an international transport and transit hub.

The issue figured in the 16th round of foreign office consultations in Tehran between a delegation led by Indian Foreign Secretary Vijay Gokhale and an Iranian team headed by Deputy Foreign Minister Abbas Araqchi, India’s External Affairs Ministry said.

During Monday’s consultations, India and Iran reviewed the gamut of bilateral cooperation, ongoing connectivity and infrastructure development projects, including development of Shahid Behesthi Terminal at Chabahar and full operationalization of the trilateral transit agreement.

“It was agreed to maintain the momentum of mutually beneficial multifaceted bilateral cooperation and exchanges between the two sides and to hold the next round of Joint Commission Meeting at the level of external affairs minister at an early date in Iran,” the ministry was quoted as saying by Hindustan Times.

The next round of foreign office consultations will be held in New Delhi.

The first phase of Chabahar's Shahid Beheshti Terminal 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 (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.

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 transit development via this port.

The Chabahar Port project, being developed by India in Iran, will not be impacted by US President Donald Trump's decision not to renew exemptions that let eight countries, including India, to buy Iranian oil without facing American sanctions, a state department official said.

Uzbekistan Backs India on Chabahar Port

Uzbekistan backs the development of Iran’s Chabahar Port by India, as the project will help drive trade and connectivity with the entire Central Asian region, Uzbek Ambassador to India Farhod Arziev said on Wednesday.

Calling for the revival of trade links between India and Central Asia that dated back thousands of years, he said Chabahar Port will “only play a positive role for expanding trade and economic relations”, Hindustan Times reported.

“We see great practical value in the Chabahar project and, no doubt, with the full implementation of the Chabahar project, the scope and opportunities for India, Uzbekistan and Central Asia as a whole will be expanded,” he said.

Arziev noted that Uzbekistan also backed India’s membership of the Ashgabat Agreement for a transport corridor to Oman as well as the North-South Corridor to boost connectivity options.