New Delhi: India Saturday approved the framework of an inter-governmental Memorandum of Understanding (MoU) for setting up an USD 85.21 million joint venture firm for equipping two fully-constructed berths in Iran's Chahbahar port.
Chahbahar port is located in Sistan-Baluchistan Province on Iran's south-eastern coast and is of great strategic utility for India. It lies outside the Persian Gulf and is easily accessed from India's western coast.
India's presence at the Chahbahar port would give it a sea-land access route into Afghanistan through Iran's eastern borders, an official statement said.
The statement, issued after the Cabinet meeting headed by Prime Minister Narendra Modi, said the framework of the MoU would to be finalised by the Governments of India and Iran.
As per the framework, approved in the Cabinet, an Indian joint venture company would lease two fully constructed berths in Chahbahar port's Phase-I project for a period of ten years, which could be renewed by "mutual agreement".
"The JV company will invest USD 85.21 million for equipping the two berths within 12 months as a container terminal and the second as a multi-purpose cargo terminal," it said.
The Indian side will transfer ownership of the equipment to be provided through the investment to Iran's port and Maritime Organisation (P&MO) without any payment at the end of the tenth year.
"The Indian side can form a JV that could include one or more Iranian companies subject to the approval of the P&MO," it said.
The Indian and Iranian sides could enter into subsequent negotiations for participation in the construction, equipping and operating of terminals in Phase-II on BOT basis, subject to the Indian side’s satisfactory performance in Phase-I.
The Iranian side will make efforts to provide Free Trade Zone conditions and facilities at the port.
As per the statement, Cabinet also approved to constitute a JV or other appropriate Special Purpose Vehicle comprising the Jawaharlal Nehru Port Trust and the Kandla Port Trust.
If required, a local Iranian partner and/or an Indian private sector partner will serve as the vehicle for India's participation in the development of the port, it added.
"Approval was also given for incurring annual revenue expenditure of USD 22.95 million to support operational activities of the Indian JV," the statement said.
From Chahbahar port using the existing Iranian road network, a link up to Zaranj in Afghanistan and then using the Zaranj-Delaram road constructed by India in 2009, access to Afghanistan`s garland highway can be made.
This would establish road access to four of the major cities of Afghanistan - Herat, Kandahar, Kabul and Mazar-e-Sharif.