India and Iran this week formally signed the long-anticipated contract for the development of Chabahar port in Iran’s Baluchistan province, in a project which is expected to eventually create a regional trade, investment and transportation hub between the Indian Ocean and Central Asia. The deal was signed between India Ports Global Private Limited (IPGPL) and Iran’s Ports and Maritime Organization (PMO), committing IPGPL to invest $500m in the development of two terminals and five multi-cargo berths in the first phase of the project. The port will be used to ship crude oil and urea, and India intends to lease at least two berths at Chabahar for 10 years.
“The bilateral agreement to develop Chabahar port and related projects, and India’s provision of $500m is an important milestone,” Prime Minister Modi told the media after the signing, “and is a major effort to boost economic growth in the region,” he added.
Iran’s existing Iranian road network will eventually link the new port up to Zaranj in Afghanistan almost 900km to the north. This in turn will provide access to four major cities in Afghanistan — Herat, Kandahar, Kabul and Mazar-e-Sharif – via the Garland highway that was completed in 2009.