Iran Exports to Afghanistan Expected to Drop to $2.9b by March 2021

EghtesadOnline: The coronavirus crisis is expected to reduce Iran’s exports to Afghanistan to $2.9 billion in the current fiscal year (March 2020-21) compared with $3.2 billion in previous years, the chairman of Iran-Afghanistan Chamber of Commerce said.

News ID: ۷۸۵۵۹۳

17 August 2020

Noting that the neighboring Afghanistan meets 40% of its imports, including construction materials, food and fuel from Iran, Hossein Salimi added, “We intend to improve commercial exchanges with Afghans by making investment in their mining sector. Such investments will increase Afghanistan’s revenues and improve their purchasing power. Iranians’ financing of two projects, including a carbonated soft drink plant, has already begun.”

A number of trucks crossed Milak border crossing into Iran to mark the reopening of the border after the repeated opening and closing in the past week, according to spokesperson of the Islamic Republic of Iran Customs Administration Rouhollah Latifi.

A compromise has been reached following a meeting between Iranian and Afghan local officials at Milak border terminal in southeastern Sistan-Baluchestan Province, Mehr News Agency quoted him as saying.

Over the past three weeks, the movement of trucks and goods carriers was delayed due to a strike by Afghan truckers and their blocking of the return route of Iranian trucks and the retaliation of Iranians.

Sistan-Baluchestan Provincial Security Council has ordered the impoundment of over 130 Afghan trucks smuggling fuel from Iran to the neighboring country for three months. Some Afghan transportation companies and truckers closed the return route of Iranian trucks at Zaaranj-Milak border crossing in protest. In return, Iran also restricted the return route of Afghan trucks to their country.

Border officials of the two countries underscored the importance of cross-border trade and reopening of the Milak border following a meeting on August 4 and finally it was reopened on August 6. Afghan truckers were seemingly not satisfied with the outcome of the meeting and they closed the route again on August 10.

Besides Milak (which is the main trade corridor between Iran and Afghanistan), the two countries have two other border crossings, namely Mahiroud in South Khorasan Province and Dogharoun in Taybad County of Khorasan Razavi Province.

According to Hamid Mohammadi, an official with Road Maintenance and Transportation Office of Khorasan Razavi, Afghanistan has transported 15,000 tons of its products by 610 trucks through Dogharoun to Iran’s southern borders and western border from March 20 to July 21.

“Since March 20 up until now, 256 trucks have transported goods from Chabahar Port to Dogharoun compared with 11 trucks in the last [fiscal] year [March 2019-20],” he was quoted as saying by IRNA on Friday.

Afghanistan was Iran’s fourth export destination in the four months leading to July 21. It purchased 2.11 million tons of goods worth $713 million, accounting for 8% of Iran’s total exports in the four months.

Chabahar's Pivotal Role for Afghanistan

The southeastern port of Chabahar has played a pivotal role in supplying essential goods to Afghanistan. That has urged some Afghans to make investments there; a number of silos are being constructed in Chabahar, which have also helped generate new jobs for Iranians, particularly in Sistan-Baluchestan,” Salimi was quoted as saying by ILNA.

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

Chabahar is Iran’s only oceanic port town and consists of two separate port terminals: Shahid Kalantari and Shahid Beheshti. The opening of the first phase of Shahid Beheshti Port (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.

Minister of Roads and Urban Development Mohammad Eslami flagged off track laying operations for a railroad connecting the southeastern port city of Chabahar to the eastern city of Zahedan near the border with Afghanistan and Pakistan last month.

Mohammad Reza Azarian, the project manager, said 92,000 tons of rails are needed to complete the 700-kilometer track. He added that UIC60 rails manufactured by Esfahan Steel Company will be used in this project.

“As per a contract with ESCO, the Isfahan-based company will supply 5,000 tons of rails in the first stage, of which 1,000 tons have been delivered. Track-laying of one kilometer of railroad is planned to be completed in one day,” he was quoted as saying by Fars News Agency.

The 628-km railroad will include 34 stations and pass through Chabahar, Tis, Konarak, Nik-Shahr, Iranshahr, Khash and Zahedan.

With the new railroad in place, 927,000 passengers and 2.8 million tons of cargo will be handled annually by March 2023.

Average speed of freight trains will be 120 km per hour while passenger trains will run at 160 km per hour.

It will create jobs for 13,000 people and 3,000 will be involved directly in the project.

As planned, track laying of 150 kilometers of Chabahar-Zahedan railroad will be complete by March 2021.

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

After connecting Iran’s only oceanic port of Chabahar to Zahedan, the railroad will be linked to Zaranj in Afghanistan. When Afghan cargo arrives in Zahedan, it can be transported to Chabahar and then to India.

A total of €300 million have been allocated to this project from the National Development Fund of Iran,” Mohammad Baqer Nobakht, the head of Plan and Budget Organization, has said.

Commenting on plans to open a branch of Afghanistan’s Ghazanfar Bank in Chabahar recently approved by the Central Bank of Iran, Salimi said, “Implementation of Financial Action Task Force standards by the destination country is one of the key requirements for establishing an offshore bank. Afghanistan complies with the international standard on anti-money laundering while Iran has yet to join FATF.”