Chabahar Port connectivity game changer Contents Indian Ocean
Chabahar Port - connectivity game changer
Contents Ø Indian Ocean Region Ø Iran - a major regional country and vital transportation hub Ø Iran-India relations Ø International North-South Corridor Ø India Ports Global Ltd Ø Development of Shahid Behesti Port at Chabahar Ø Geographical Advantages of Chabahar Port Ø Chabahar Free Trade Zone Ø Connectivity vision - Eastern Transport Corridor Ø Iran-India- Afghanistan trilateral Transit Agreement Ø Chabahar - a potential game changer 2
The Indian Ocean Region (IOR) Sub-regions and Countries in the IOR GCC and Non GCC States Kuwait, Bahrain, Qatar, UAE, Oman, Saudi Arabia, Yemen, Iraq, Iran, Jordan, Syria, Lebanon, Israel Egypt, Red Sea and Horn Somalia, Djibouti, Eritrea, Sudan, Egypt Sub – Saharan African South Africa, Mozambique, Tanzania, Kenya, Comoros, Madagascar, Mauritius, Seychelles Indian Sub Continent India, Pakistan, Bangladesh, Sri Lanka ASEAN + Oceania Myanmar, Thailand, Malaysia, Singapore, Indonesia, Australia Source – CSIS report on the Indian Ocean Region, A Strategic Net Assessment Indian Ocean carries one half of world’s container shipments, one-third of the bulk cargo traffic and two-thirds of the oil shipments 3
The Indian Ocean Region (IOR) Why it is so important – Choke Points Ø IOR is a vibrant shipping region having four important waterways: Ø Suez Canal , Ø Bab el Mandeb Ø Strait of Hormuz e Af a co a ric in stl Ø Strait of Malacca Ø 55 per cent of known oil reserves and 40 per cent of gas reserves are in the IOR Ø More than 80% of the world’s oil trade transits through IOR Ø India imports about 70% of its oil through it Ø Major seaports: Mumbai/JNPT, Mundra/Kandla, Bander Abbas, Chennai, Kolkalta, Colombo, Singapore, Kolkata, Durban, Richards Bay 4
India – Iran Relations Ø Republic of India and Islamic Republic of Iran share very close relationship not only in political and cultural fields but also in the maritime sector. Ø Irano-Hind Shipping Company, a JV between two national shipping lines, was formed in March 1975. Ø Indian Experts were deputed to help IRISL (then Arya National Shipping Lines) and also Chabahar Maritime Academy. Ø International North-South Transport Corridor Agreement signed in September 2002. 5
International North – South Transport Corridor (INSTC) Ø India & Iran are major players in Indian Ocean Region Ø INSTC project was initiated by Russia, India and Iran in September 2000 in St. Petersburg. The agreement was signed on 16 th May 2002 Ø INSTC is one of corridors that India is working on as part of connectivity initiatives parallel to China's One Belt One Road 6
…INSTC Ø The INSTC is meant to connect Northern Europe with South East Asia. It serves as a link connecting railways of Azerbaijan, Iran and Russia Ø Current members are India, Iran, Russia, Azerbaijan, Kazakhstan, Armenia, Belarus, Tajikistan, Kyrgyzstan, Oman, Syria, Turkey, Ukraine, and Bulgaria (observer) Ø INSTC substantially reduces time taken and cost for transport of goods between India and Eurasia once fully functional and increase economic activities between India and resource-rich Russia as well as markets of Europe. Ø INSTC route via Iran is expected to be 30 percent cheaper and 40 percent shorter than the current route via Suez Canal Ø During the first three quarters of 2017, 4. 7 Million Tons of cargo was transported along INSTC which is 21. 6% more than in the same period last year 7
…INSTC Ø Volume of container transportation grew 2. 4 times compared to previous year. Over 7000 containers were transported along the corridor during the three quarters of this year Ø The corridor is target to transport 10 Million Tons of cargo per year in future Ø Railway authorities of Iran, Azerbaijan and Russia are co-ordinating well to make INSTC a grand success Ø Though Amirabad port is connected to the Iranian railway network, however we look forward to commissioning of Rasht – Astara railway line Ø INSTC will further grow provided tariff is applied suiting all sides, simplification of customs clearance procedures and establishing of a permanent transport services 8
India Ports Global Limited (IPGL) Ø India Ports Global Ltd was formed by the Government of India in January 2015 to undertake port projects overseas. Ø India Ports Global is promoted by two major ports of India: Ø - JNPT, the biggest Container Port of India (ranked 32 nd in the top global container ports) holds 60% equity Ø - Kandla Port, the overall biggest major port of India specializing in handling bulk cargo, holds 40% Ø Shahid Behesti Chabahar Port Project has been entrusted to India Ports Global Limited by Ministry of Shipping 9
Contract for Shahid Beheshti Port at Chabahar Taking relationship forward, a ministerial level MOU on Chabahar – Shahid Beheshti Port was signed between India and Iran on 06. 05. 2015 After several rounds of discussions, the historic agreement was inked on 23 rd May 2016, in presence of Hon. Prime Minister of India and HE President of Islamic Republic of Iran. 10
Chabahar Port Contract salient features Ø Contract signed between India Ports Global Limited (IPGL) and Aria Banadar Port and Marine Services Company (ABI). Ø PMO (Iran) and Ministry of Shipping (India) are the confirming Parties to the Contract Ø India to equip & operate two terminals for 10 years in Phase 1 Ø India to invest about USD 85 million for purchase of Equipment Ø Iranian side is responsible for providing infrastructure facilities Ø Lessor / Lessee relationship Ø Minimum Traffic Guarantee Ø Revenue sharing mechanism 11
. . . salient features Ø Indian Government to provide a credit line of USD 150 million dollars to PMO for development of Chabahar Port Ø Operation of two terminals will commence within a period of maximum 18 months after Contract Activation Ø Phase 1 is expected to be operational by end of 2018 Ø India Ports Global will form an SPV (Special Purpose Vehicle) with a private entity, in Iran to operate the port Future Green Ports and Terminals 12
Chabahar Port Location 13
Chabahar Port Development Plan Phase 1 - Plan Container Berth : 640 m Multipurpose Berth : 600 m Equipment: 4 RMQC + 14 RTGC 14
Chabahar – Shahid Beheshti Port Present Condition & Phase 1 Ø Presently there are 5 berths at Shahid Beheshti Port with a capacity of 2. 5 million tons per year. Ø One of these berths can accommodate vessels of 80, 000 dwt drawing a draft of 14 mts. Containers and bulk cargo can be handled using Mobile Harbour Cranes Ø Remaining 4 berths have a draft of about 9 -10 mts with adequate cargo handling equipment Ø On completion of Phase I(IPGL terminals) the capacity will increase to 8 MTPA Ø On completion of all 5 phases, port capacity will 82 million tons per year with 32 jetties: 16 multipurpose, 10 containers, 3 each oil and dry bulk. 15
Chabahar Port Pictures – Phase 1 & Phase 2 16
Chabahar Port Pictures – Phase 1 & Phase 2 CHABAHAR PORT PROJECT - PHASES PHASE I 2 terminals to be equipped and operated by IPGL MULTIPURPOSE TERMINAL – 600 mts CONTAINER TERMINAL– 640 mts PHASE 2 PHASE 1 17
Chabahar Port Geographical Advantages RELEVANT DISTANCES CHABAHAR 550 N M KANDLA 78 6 N M MUMBAI 18
… Advantages 1650 km 2200 km 1900 km 663 km 405 nm 380 nm 135 nm 19
Chabahar Free Trade Zone Ø Total area - 14, 000 hectares: Ø Industries - 10, 000 hectares Ø Light Industries - 3, 000 hectares Ø Heavy Industry - 7, 000 hectares Ø Benefits: Ø 100% capital and profit repatriation Ø Income and Corporate tax exemption for 20 years Ø Duty exemption on import of raw material and machinery Ø Projects in pipe line: Ø Petro Chemical Complex – 1200 hectares Ø Refinery Ø Steel Mills for processing mineral ore – 3 nos Ø Car Manufacturing hub – 400 hectares 20
Connectivity vision Eastern Corridor ROAD ACCESS - AFGHANISTAN ZAHEDAN - ZARANJ 220 KM ZARANJ - DELARAM 215 KM CHABAHAR – ZAHEDAN 663 KM CHABAHAR – IRAN SHAHR 310 KM 21
Trilateral Transit Agreement Ø Concurrent with Chabahar Port Development Contract, an Agreement on Establishment of an International Transport and Transit Corridor amongst the Governments of the Republic of India, the Islamic Republic of Afghanistan and Islamic Republic of Iran was signed on 23 rd May, 2016 Ø Support the economic development of Afghanistan by greater connectivity and un-hindered flow of commerce and trade Ø Reduce the logistic cost which has always been paramount Ø The objective being to support landlocked Afghanistan by giving access to the open seas through Chabahar Port Ø This paves the way for an alternate, reliable and robust connectivity to Afghanistan Ø The route will provide a reliable transport corridor for smooth transport and transit of the goods through Chabahar Port Future Green Ports and Terminals 22
Trilateral Transit Agreement Ø Chabahar will connect Afghanistan at Zaranj through Iranian cities of Zahedan, Zabol and Milak. Ø The total distance is approx. 987 km Ø India has already built the 215 km long, Zaranj – Deleram stretch inside Afghanistan to connect to Afghan garland (ring) road thereby providing connectivity amongst all four major cities Ø Chabahar provides India vital access to mineral resources in Afghanistan through land route via Iran. Ø Even Turkmenistan can also be access through Sarakhas border is 1900 Km from Chabahar Port 23
Garland Road Ø 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 Ø This would establish road access to four of the major cities of Afghanistan -- Herat, Kandahar, Kabul and Mazar-e. Sharif 24
New Route Carved Out Ø The first step to operationalize Trilateral Transit Agreement has been taken on 29, Oct 2017, when M. V. Behshad was flagged off from Kandla Port, carrying 645 containers of wheat aid for Afghanistan Ø This will require approx. 220 trucks per day for the land transport Ø Six more loads will be sent over the next few months Ø This translates into almost 4, 800 containers reaching into all seven provinces of Afghanistan via Chabahar Port Ø This transit cargo will also serve as a test run and for further streamlining the cross border connectivity Ø This development marks a new chapter in regional cooperation & connectivity among the three nations 25
Therefore Chabahar Port will be a game changer Ø Port backed by Free Trade Zone Ø Port itself expected to have all advantages of FTZ Ø Geographical location – outside Hormuz Strait Ø Proximity to west coast of India Ø Deep draft Ø Can not only serve landlocked Afghanistan but also CIS countries through Turkmenistan Ø Alternative EU route - Eastern North-South Corridor Ø Immense potential for transit cargo 26
Thank You Questions… 27
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