Chabahar port, Iran’s wining card in trade with South Asia, CIS
Chabahar port, Iran’s wining card in trade with South Asia, CIS

 In southeastern Iran, on the Gulf of Oman, there is a port city called Chabahar which is the home for Iran’s only oceanic port. Due to its strategic geographical positioning, Chabahar port holds a great significance for Iran both politically and economically. After years of negotiation, Iran has awarded the development project of this port […]

 In southeastern Iran, on the Gulf of Oman, there is a port city called Chabahar which is the home for Iran’s only oceanic port. Due to its strategic geographical positioning, Chabahar port holds a great significance for Iran both politically and economically.

After years of negotiation, Iran has awarded the development project of this port to India, and the South Asian country committed $500 million to build two new berths in this port.
However, after the U.S. reimposed sanctions on Iran in November, the future of many Iranian projects including Chabahar port were shadowed by the consequences of the sanctions.

But following several rounds of negotiations and discussions with New Delhi, the U.S. administration finally exempted the Chabahar project from the sanctions.

The new improvements around this important port intrigued the Tehran Times to pay a visit to Chabahar and conduct an interview with Behrouz Aghaie, the director general of Ports and Maritime Department of Sistan-Baluchestan Province (where Chabahar lies). What follows is the gist of the interview with the official.

An introduction to Chabahar port and development project

Chabahar has two main ports, Shahid Kalantari port and Shahid Beheshti port. Shahid Kalantari port’s development has been finished in 1983. However, the development project for Chabahar’s Shahid Beheshti port is planned to be implemented in five phases of which the first phase was started in 2007 and due to financial problems resulted from U.S.’s first round of sanctions on Iran the project was almost halted until 2016 in which the sanctions were lifted over Iran’s economy.

“In May 2016, Iran, India and Afghanistan signed a trilateral transit agreement in Tehran, a part of which is dedicated to Chabahar port’s development project.” Aghaie said.

India for long, has been negotiating with Iran for cooperation in development of this important port. Since through Chabahar port India can bypass Pakistan and transport goods to Afghanistan and Central Asia, while Afghanistan can get linked to India via sea.

At the time, Indian Prime Minister Narendra Modi announced that New Delhi would be investing $500 million in the strategic port.

Then during the visit of the Iranian president to India in February 2018, the lease contract for Shahid Beheshti Port-Phase 1 was signed between Iran’s Ports and Maritime Organization (PMO) and India’s Ports Global Limited (IPGL).

Aghaie noted that after settlements, the Indian party has chosen an Iranian company to cooperate in the development project.

“They held a tender in which various Iranian candidates attended and in the end a company named Kaveh Group was chosen as the Iranian partner in this project”, he mentioned.

According to the official, technology transfer is an important part of the deal with the Indian side and in this regard most of the work force which is going to be employed for this project are going to be from Iran and the Indian side is also committed to transfer port related knowledge and technology into the country.

Aghaie further mentioned the progress of the Shahid Beheshti Port Phase 1 so far, saying, “During this phase over 203 hectares of land has been reclaimed, construction of three multi-purpose berths with a total length of over 1700 meters is completed, and over 15.5 million cubic meters of dredging has been executed which creates 16.5 meters of depth for berthing of vessels with even highest drafts.”

“We have also constructed a 1470-meter breakwater tail to make it completely safe for vessels to berth during monsoon season,” he added.

Asked about the equipment and machinery, the official explained that near €60 million worth of equipment, mobile cranes, towers and pneumatic ship unloaders, lifts and tractors have been purchased and they have been operated during the phase 1 of development project, most of which have been bought from renowned European companies including those from Germany and Finland and some are supplied by Iranian Machin Sazi Arak Company.

Role of private sector

Speaking about the role of the country’s private sector in this project, Aghaie stressed the importance of this sector’s presence in Chabahar development saying, “The Ports and Maritime Organization has so far invested over $1 billion in Chabahar development project and this has made the private sector to see the importance of this port for the country’s economy and made them to come forward.”

“They need to come forward and we always welcome them and support every company that is willing to cooperate with us in making this port what it is deserved to be”, he underlined.

According to Aghaie, since the beginning of the current Iranian calendar year (March 2018) the private sector has invested over 450 billion rials (near $107 million) in the first phase of developing Shahid Beheshti port and he expressed hope that another $105 million will also be attracted by the end of the current Iranian calendar year (March 2019).

Progress in port activities

Regarding the improvements of Chabahar’s ports in terms of commodity transit, exports, imports and transship, Aghaie explained, “Since the inauguration of the phase 1 of Shahid Beheshti Port, in container area we have witnessed a 70 percent rise in various fields of transit and transshipment, as for the oil terminal, the figure for the oil cargoes loading and unloading has jumped by 50 percent and finally as a whole we can say that on average the trade activities of Chabahar port have increased by 50 percent up to date.”

“In the past six months over 110,000 tons of goods have been transited through Chabahar’s ports”, he added.

Advantages and features

As Iran’s only ocean port with over 500 kilometers of marine border, Chabahar has a great deal to offer to the country’s economy, the investors, the neighboring countries and even the region.

This port is located outside the Persian Gulf region and Hormuz area and so doesn’t have the limitations of the country’s other ports in regard to the South East Asian trade. This port could be a transit gate from Indian Ocean Rim Association (IORA) countries to CIS counties and also Afghanistan. It is the most cost efficient and optimal route to link IORA and CIS and event to Europe and Africa.

The port has also one of the largest international passenger terminals in the region with a capacity of simultaneous reception of over 600 passengers.

Exemptions and potentials

Sistan-Baluchestan Province’s Ports and Maritime Department offers significant incentives for both investors and shipping companies who are willing to cooperate and operate in this port.

Land delegation as long-term lease agreements in form of BO.O.T, B.L.T, B.O.T, and B.O.O investment contracts, offering the opportunity for warehouse delegation in form of short- and long-term lease agreements, bringing equipment into Chabahar in form of partnership agreements subject to rules and regulations of free industrial-trade zones and especial economic zones and etc. are some of the great incentives and opportunities that Chabahar offers for those who are willing to invest or cooperate in this port.

There are also several discount items for shipping cargoes among which a 30-percent discount for all terminal handling charges (THC), and over 75 percent discount for the storage of import containers and 80 percent discount for storing export goods can be mentioned.

Rail projects related to Chabahar port

Connecting the ports to the railway network is among the prioritized plans that will contribute significantly to promotion of the country’s transit status.
For example, a railway is under construction to connect Chabahar Port to Zahedan, the center city of Sistan-Baluchestan Province, which will elevate the role of this strategic port in transit of goods.

According to Aghaie, the project to build this railway has a 30-percent progress and it will be complete by the next three years.
“Railway and rail development is one of the most important requirements of any improvement in Chabahar port’s commodity transit and traffic”, he emphasized.

bypassing longtime rival Pakistan. The country sent its second consignment of wheat to Afghanistan via Chabahar in last November and has said that it plans to send more shipments of wheat to Afghanistan via the Iranian port.

According to the official since the beginning of the phase 1, over 12,000 twenty-foot-equivalent units (TEU) loading and unloading has been done in this port which is 100 percent more than the figure for all the loading-unloading done in the history of this port.