India’s two leading ports Jawaharlal Nehru Port Trust (JNPT) and Kandla Port Trust (KPT) are in the process of forming a special purpose vehicle likely to be named Indian Ports Global (IPG) to take on long-term lease two berths for development and running at Chabahar Port in Iran. In IPG equity, JNPT will have ownership of 60% and KPT 40%. In all likelihood, around the time a memorandum of understanding is signed between India and Iran in the New Year for execution of the project at an investment of $85.21 million, IPG will induct an Iranian partner. An Iranian partner will prove useful in sorting out local issues that will keep cropping up. An Indian shipping ministry official says the investment is required to equip the two berths — one to handle general cargoes and the other containerized materials — within 12 months of the signing of the MOU.

Standing as India’s first overseas port venture, the project has significant strategic bearing in that two berths at Chabahar Port will give India a sea-land access to Afghanistan’s major cities like Herat, Kandahar, Kabul and Mazar-e-Sharif through Iran’s eastern borders. The access will be facilitated through the Zaranj- Delaram road, which India built in 2009. China and India are locked in competition to gain influence in strategically important land-locked Afghanistan, which abounds in minerals like iron and copper ore, uranium, lithium, cobalt and gold. Afghanistan, a country nearly the size of Texas, is described as a geological gold mine valued at $1 trillion by US scientists. Both China and India are keen to expand their participation in infrastructure development of Afghanistan, including building of ports in Iran to find favour with Kabul in securing access to minerals deposits. Like China India is eyeing iron ore and copper deposits in Afghanistan.

IPG is taking the two berths at Chabahar on a ten-year lease and it will transfer ownership of port equipment to be installed to make the berths operational to Iran’s Port and Maritime Organization (P&MO) without claiming any payment on lease expiry. Parties involved in the two countries could be engaged in negotiations post phase I lease expiry for further participation by IPG in “building, equipping and operating” the terminals during phase II on build, operate and transfer basis. IPG’s winning of a lease extension will depend on its performance in equipping and running the terminals in phase I. To make the operation of the two terminals attractive,Tehran has promised to consider extending free trade zone facilities. Chabahar Port located in the 

Sistan-Baluchistan province on Iran’s south-eastern coast lies outside the Persian Gulf, which is easily accessible from India’s western coast.

Dhamra Port expansion: soon after Adani Ports & Special Economic Zone bought Dhamra Port at Rs55bn ($925m) in May, it began the preparatory work for expanding the capacity of the deep sea port in India’s coastal state Orissa from 25mt (million tonnes) to 100mt. The port was built by a joint venture company equally owned by Tata Steel and L&T Infrastructure Development Projects.

Expansion of capacity involving creation of 11 new berths will need 736 acres of land adjoining the present port site. The land is to be acquired from Orissa government. Dhamra Port director Santosh K. Mohapatra says, “the government is keen that the port expansion work is taken up quickly. It has sanctioned land allotment and we hope to get 736 acres from the state land bank.” The fourfold port capacity expansion will require investment of Rs100bn.

Dhamra’s two operational berths have capacity to handle 13mt of cargoes for export and 12mt for import. Commissioning of 11 new berths will give the port an extra capacity of 75mt, allowing Dhamra to occupy space with India’s all-season very big ports. Execution of Dhamra’s second phase growth will also create condition for building a 5mt liquefied natural gas (LNG) terminal within the port compound by Indian Oil Corporation, the country’s largest company owned by the central government. Building of the specialised LPG terminal to occupy 150 acres will need investment of Rs50bn. Created as a port to handle dry bulk cargoes like iron ore, coal and steel products, Dhamra’s cargo profile will undergo change as it will start handling containerised cargoes on completion of second- phase growth. At the same time, the port will also be adding many new general items, including clean goods in its cargo profile.

Against its present capacity of 25mt, Dhamra handled cargoes of 14.31mt in 2013/14, an improvement of 29.3% over the previous year. “Expansion work will start soon. The target is to complete expansion in 30 months. It is part of our aim to increase our cargo capacity to over 100mt by 2020,” says Mohapatra. Expansion will also call for strengthening ex-port infrastructure like a four-land freight road through Dhamra to Bhadrak corridor and doubling of the rail track.

Kunal Bose