Japan May Join India in Iranian Port Investments

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By MarEx 2016-05-12 20:14:51

The Japanese government may join with India in new investments in the Iranian port of Chabahar, a project that would include cargo terminals and a new industrial zone. 

The deal would be among many new foreign investments in Iranian infrastructure following years of isolation; Western sanctions on Iran over its nuclear activities were lifted in January, though certain banking and trade activities remain restricted. 

Chabahar lies on the Gulf of Oman, near the border with Pakistan, and has ready access to the Indian Ocean. In addition to its prime location for shipping, it would also give overland access to Afghanistan and central Asia, a strategic and trade consideration for both India and Japan. India has already announced $20 billion in funding for fertilizer and petchem industries adjacent to the port, taking advantage of Iran's ready supply of natural gas. India hopes to reduce its shipping costs for Iranian crude oil and fertilizer by 30 percent by shipping out of Chabahar, which is the closest Iranian port to the subcontinent. 

On May 11, Iran's PressTV provided the first details of those investments. Three Indian state-run chemical and fertilizer firms will work with Iran's Bank Pasargad to build an $800 million, 1.3 million ton-per-year fertilizer (urea) plant at the port. Fertilizer is in high demand in India, and the market is expected to grow. 

India's investment in Chabahar is also viewed as a counterbalance to large-scale Chinese activity in Pakistan; as part of the $45 billion China-Pakistan Economic Corridor, China is building a road- and rail-connected port and naval base at Gwadar, a move that has Indian leaders concerned over strategic implications. 

Nikkei reports that the Japanese government will create detailed development assistance plans for Chabahar this year, through the Japan International Cooperation Agency, and will create a list of eligible firms for a tender. A specific investment amount has not yet been reported.