India's PM, Iran President Discuss Chabahar Project

EghtesadOnline: Indian Prime Minister Narendra Modi and Iranian President Hassan Rouhani met on the sidelines of the UN General Assembly in New York on Thursday a day before the prime minister addressed the world body.

News ID: ۷۴۸۵۵۰

28 September 2019

The two leaders discussed the progress of Chabahar Port project, which India has helped develop.

“They [the leaders] especially mentioned operationalization of Chabahar Port and noted its importance as gateway to and for the landlocked Afghanistan and the Central Asian region,” the Indian Ministry of External Affairs said in a statement.

Chabahar Port has been described as a counterstep to Gwadar Port that Pakistan is developing with investment from China, according to Financial Tribune.

Last year, Iran’s Foreign Minister Mohammad Javad Zarif had recommended their linking. He said both Chabahar and Gwadar Port, which is an important link in the China-Pakistan Economic Corridor project, are crucial for the development of eastern and southeastern Iran, and southwestern Pakistan, Scroll.in reported.

Modi reiterated India’s priority to diplomacy, dialogue and confidence building to maintain peace, security and stability in the Persian Gulf region.

“It was agreed to mark the 70th anniversary of establishment of diplomatic relations in 2020,” the ministry said.

The two leaders had failed to meet on the sidelines of the Shanghai Cooperation Organization Summit in Kyrgyzstan’s capital Bishkek in June because of schedule conflicts.

Iran is important to India because it is the third-largest supplier of oil after Iraq and Saudi Arabia.

India, Iran and Afghanistan signed the trilateral transit agreement or the 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.

India Global Ports Limited has been tasked with administering and running the terminal of the first phase of the terminal. The entity is planning to invest $500 million over the next 10 years in the port.

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

The opening of the first phase of Shahid Beheshti Terminal (out of five phases defined for the project), which has tripled its capacity to 8.5 million tons (equal to that of all the northern ports of the country), allows the docking of super-large container ships (between 100,000 DWT and 120,000 DWT) and increase India’s connectivity with Afghanistan.

The Iranian Cabinet decided recently 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.

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.

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.

“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,” Khatibi 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 earlier this month Minister of Roads and Urban Development Mohammad Eslami vowed 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 the 1,380-km railroad to Chabahar and then shipped to India.