The Jawaharlal Nehru and Kandla ports are in discussion with Iran for operating a multi-purpose terminal at Chabahar. The two major ports are likely to seek financial assistance from the ministry of external affairs to operate the Iranian port which has been of strategic interest to India for decades.
The Union shipping ministry finds the project financially unviable and, therefore, wants the external affairs ministry- which is piloting the project– to provide one time capital grant and an annual grant to make the project sustainable. “We are in the process of formulating a cabinet note asking for a grant since it has to make financial sense for the Indian ports to invest in the terminal. The final decision in this matter has to be taken by the external affairs ministry,” a senior government official said. Industry experts feel the economic potential of the port cannot be estimated in the short run and that it can be estimated only after certain time frame.
The estimated project cost is around $100 million. JNPT, country’s largest container port, and Kandla, the largest port by total cargo, will come together to form a special purpose vehicle which will operate the terminal at Chabahar under a revenue share agreement with the Port and Maritime Organisation, Iran. The agreement would be signed for a minimum duration of 20 years.
The port project has been delayed because of various reasons including the US and EU sanctions on Iran because of its nuclear programme. It is believed the Chabahar Port would give a geo-political network of such scale as has not been since the Mughal era. Because of its strategic location near Afghanistan, Turkmenistan and Central Europe, India would get road access to these countries.
“This project could give us access to the Turkmenistan and Iran pipeline as well, since India could operate LNG terminal at Chabahar. We can also readily approach central Asia and not be blocked by Pakistan,” Talmiz Ahmed, former ambassador to UAE said. The Gwadar port of Pakistan, in the vicinity of Chabahar, was taken over by China, making it strategically important location for India.
If the two Indian ports start operating the Chabahar terminal, it is going to be the first overseas investment by the government-owned ports. In 2011, the shipping ministry was toying with the idea of setting up a company called India Ports Global to invest in port facilities overseas for strategic and commercial reasons. The project never took off and was not on the agenda of the government in the past couple of years.
