Chabahar port deal a step forward but questions remain

Last Monday, India Ports Global Ltd (IPGL), a subsidiary of the government-owned Sagarmala Development Company Ltd and Ports and Maritime Organisation of Iran entered into an agreement to let IPGL operate 5 berths at the Shahid Beheshti terminal of the Chabahar Port, Iran, for the next 10 years. For developing the infrastructure and installing the necessary equipment at the terminal, IPGL will invest $120 million and a credit line of $250 million will also be arranged. The government has said the Chabahar model will be replicated elsewhere.
 

While this project may have some geopolitical strategic significance, the government has also talked about improved connectivity that the port will provide for movement of goods between not only India at one end and Afghanistan and Central Asian Republics at the other, but also for the multimodal movement of goods through the work-in-progress International North South Transport Corridor (INSTC) to connect India with Russia and the countries in its southern periphery via Iran and the Caspian Sea in due course. Such hopes must be seen in the context of proposals to develop railway lines from the Chabahar port to certain parts of Iran, to develop a Special Economic Zone at the Chabahar port and to exploit some iron ore mines in Afghanistan. When these plans will materialise is anyone’s guess.
 

Iran conceived the development of the Chabahar port, located in the southern end of its eastern province of Sistan-Baluchestan, in 1973. After 50 years, it has just 10 berths constructed (five with India’s recent involvement) and handles very little cargo, because 90 per cent of Iran’s population is concentrated in the western part of the country and the dry eastern part is much less developed. The Shahid Rajaee port, near Bandar Abbas, about 600 km to the west of Chabahar, with its 46 berths handles more than 85 per cent of Iran’s cargo. It is connected by road, rail, and air with Tehran, which is only about 1,200 km from Bandar Abbas by road, whereas it is about 1,800 km from Chabahar. The distance from Chabahar to Kabul through a road route not going through Pakistan is about 1,800 km, just 100 km less than the distance from Bandar Abbas. Ashgabat, the capital of Turkmenistan, the nearest of the Central Asian Republics, is about 1,600 km from Bandar Abbas, about 200 km less than from Chabahar. Of course, some less populated parts of Afghanistan and Turkmenistan are nearer from Chabahar, but that seems inadequate reason for Iran to develop Chabahar port with its own money. In fact, Iran has plans to invest around $2.38 billion at Shahid Rajaee port, plus about $880 million for its hinterland development. Iran’s interest in Chabahar port appears rather limited.
 

The 7,200 km INSTC project was conceived in 2002 to reduce the time and cost of moving cargo from India to Russia via Iran. More countries have now joined but the progress is very slow. However, even when it becomes a reality, the Chabahar port may not be part of the preferred route as the Iranian ports in the Caspian Sea are closer and better connected from Bandar Abbas. Thus, the Chabahar port deal appears a step forward, but we have to wait and see how it develops and helps trade grow in the coming years. 

Email: tncrajagopalan@gmail.com