Iran Private Ports Gain Ground

EghtesadOnline: Ports run by the private sector have maintained an acceptable record of exports to neighboring countries, given their facilities and level of investments.

News ID: ۷۵۱۳۳۵

27 October 2020

The privatization of ports in Iran began in the early 2000s following the declaration of general policies of Article 44 of Iran’s Constitution by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei, which calls for the privatization of major state-owned companies.

In those years, the Ports and Maritime Organization of Iran decided to hand over port areas that had the potential to be turned into commercial ports to the private sector.

In recent years, the revival of rail and shipping lines along the Silk Road has been specified as the main goal of privatization in marine transportation sector.

“There are eight private-run sea and dry ports in the country engaged in trade with neighbors to the north and south,” Majid Yousefi, secretary of the Association of Iran’s Private Ports Investors, told the Persian-language daily Iran.

Private sea ports are Fereydunkenar in the northern Mazandaran Province, Astara Port in the northern Gilan Province, Khajeh Nafas Port in the northeastern province of Golestan, Bandar Genaveh in southern Bushehr Province and Bandar Aftab (Garzeh) in the southern Hormozgan Province.

Fereydunkenar is Iran’s first privately-managed port and the closest to Tehran through Firouzkouh and Haraz Road.

Astara Port has played a significant role in exports from the northern part of the country in recent years. It was established in the year ending March 2010 and became operational in the year ending March 2014 under a 40-year contract with PMO.

With an area of 55 hectares, Astara Port connects Iran with the Azerbaijan republic. It is located 550 kilometers from Turkey and 1,400 kilometers from the Persian Gulf coasts. It is the only northern port located near Azerbaijan’s railroad and the whole of the European rail network.

The private sector invested 500 billion rials ($1.72 million) in Astara Port in the last Iranian year (March 2019-20), according to the head of Astara Ports and Maritime Organization.

“The investments were made in establishing infrastructures such as wharfs and port facilities, storehouses, grain silos and water canals, and for expanding radio communications and marine traffic control facilities,” Kianoush Amiri was also quoted as saying by IRNA.

The official noted that Astara Port is willing to facilitate private sector investments in all areas, especially in food processing and marine tourism.

“PMO prepared infrastructures, namely wharfs, breakwater structures and warehouses, for some ports, like Fereydunkenar, and then handed them over to the private sector to complete the structural operations by purchasing the needed equipment. In Astara, the private sector was tasked with the establishment of infrastructures,” Yousefi said.

Bandar Aftab handles 500,000 tons of goods annually and as many as 70,000 passengers drive between Bandar Aftab and Kish each year.

Genaveh is another important private port in southern Iran, which has the potential to become a small container port in the future, the report said.

According to Mohammad Sadeq Kaveh, the head of the Association of Iran’s Private Ports Investors, the exchange of goods via sea is less affected by the government’s restrictive rules and regulations in private ports.

“Transportation of freights through private ports is carried out more smoothly and faster. Moreover, they have not been included on the list of US sanctioned ports,” Kaveh said.

“Astara and Fereydunkenar have the highest volume of trade with Central Asian countries, Russia and Azerbaijan while Genaveh and Aftab carry out economic exchanges with Oman, Qatar and Kuwait. Of course, compared with ports like Shahid Rajaee and Imam Khomeini, private ports have smaller volume of trade but there is no significant difference in the kind of goods they handle.”

Yousefi noted that as per the law, these ports must be returned to the government after 40 years, but the government is carrying out a revision of such contracts, considering the heavy costs of running a port.

“It is planning to reduce its share of revenues in private ports. At present, 30% of the ports’ revenues go to the government and 70% to private sector investors,” he said.

In recent years, the government has also handed over the privatization of dry ports, including Sarakhs dry port in Khorasan Razavi, Pishgaman Dry Port Yazd in Yazd and Pybar Terminal of Dogharoun in Khorasan Razavi provinces.

Kaveh said two generations of ports have been privatized in Iran.

“In the first generation of ports, infrastructures were readied by the government while in second generation ports, the private sector had to prepare the infrastructure. But the third generation of ports need to different. They must be attractive to foreign investors,” he said.

Most port activities of neighboring countries are conducted by the private sector. And because of sanctions, private sector players believe more ports must be privatized by the government.