Chabahar Port Plan Runs Into Loan Hurdle

EghtesadOnline: India’s ambitious plan to develop Chabahar Port in Iran has hit yet another snag—over what is being seen as an inordinate delay on the part of Iran to seek a $150 million loan from India.

News ID: ۷۷۴۲۵۳

28 February 2017

According to a report by Livemint.com, eight months have passed since the loan agreement was signed for the port’s development, but the Export-Import Bank of India (Exim Bank) is still awaiting the completion of an application from the Port and Maritime Organization of Iran with instructions to disburse the amount.

Based on the agreement, the contract will be activated from the day the loan has been disbursed.

Chabahar Port is located on the Sea of Oman, near Iran’s border with Pakistan. It is less than 100 km from Pakistan’s Chinese-built Gwadar Port, part of a project to open up an energy and trade corridor from Oman Sea to western China, according to Financial Tribune.

The port will allow India access to landlocked Afghanistan and energy-rich Central Asia through Jawaharlal Nehru and Kandla ports on India’s west coast. India has also built a 218- km road link connecting Delaram with Zaranj in Afghanistan, which is adjacent to Iran’s border.

Also, the port will promote Indian strategic interests in the Oman Sea and Strait of Hormuz.

A 10-year commercial agreement for the development and operation of Chabahar Port was signed between India Ports Global Pvt. Ltd. and Iran’s Arya Banader on 23 May 2016 in Tehran during the visit of Indian Prime Minister Narendra Modi.

India Ports Global is a consortium of Jawaharlal Nehru Port Trust and Kandla Port Trust.

The agreement commits India to equipping and operating the port for 10 years.

According to the terms of the agreement, India has to make a credit line of $150 million available for the development of Phase One of Chabahar Port within four months of receiving the application.

India will also have to equip the cargo and container terminals with $85 million worth of equipment within one-and-a-half years of funding.

Experts believe the port’s development should be expedited.

“India did make a strategic move to turn the Iranian port into a transit hub bypassing Pakistan … However, at this point, the ground operationalization looks far from reality. A delay in materializing the credit has implications for India in terms of connectivity and the heart of Asia policy, with Afghanistan at the center. As a pressure point for Pakistan, the volume of trade through Chabahar would impact trade between Pakistan and Afghanistan,” said Shweta Singh, an assistant professor at South Asian University in New Delhi.

The delay comes in the backdrop of India nearly finalizing the equipment purchase tender for Chabahar Port, located in Sistan-Baluchestan Province on Iran’s southeastern coast.

India’s Ministry of Shipping has floated global tenders for seven packages to buy equipment, the bids for which are being evaluated.