In a strategic move to breathe life into the India-funded Chabahar Port in Iran, India Ports Global Ltd (IPGL) has embarked on a unique procurement route to acquire essential container handling equipment. This initiative comes as a response to a six-year-long impasse that has hampered the port’s full-scale operations due to challenges in sourcing the necessary machinery.
Recent attempts to solicit tenders for cranes and container handling equipment met with suppliers’ reluctance, mainly because of sanctions imposed on Iran by Western nations. In a bid to overcome this hurdle, IPGL is now considering a novel approach. They are in discussions with entities based in Abu Dhabi, Dubai, or Sharjah, which would acquire the equipment and then facilitate its delivery to Chabahar Port.
This innovative strategy involves these UAE-based entities directly procuring the equipment from vendors. The incurred costs will subsequently be refunded to them by India in US dollars. The potential exemption from sanctions granted by the United States for Chabahar Port operations underlines the confidence in this plan.
The procurement challenges began in 2017 when suppliers grew hesitant to engage in contracts due to the Iran sanctions. Despite efforts from India to secure the necessary equipment, the United States provided a document exempting Chabahar Port from sanctions. Unfortunately, this document lacked the requisite clarity, making it challenging for equipment manufacturers to open letters of credit, a document essential for guaranteeing vendor payments.
In September 2022, IPGL initiated tenders for various equipment, including ship-to-shore cranes and Rubber Tyred Gantry Cranes (RTGCs). However, they had to repeatedly extend the submission deadlines as suppliers remained hesitant due to the sanctions.
In a surprising turn of events, IPGL canceled all the tenders on September 18, 2022, possibly signaling a change in their approach. Dr Iraj Elahi, Iran’s ambassador to India, acknowledged that they have found a solution to procure the equipment. While not disclosing the specifics, he hinted that the issue has been resolved between India and Iran.
The Chabahar Port project, a vital maritime transit link to Afghanistan and Central Asia, has seen delays in equipment procurement, hindering its official launch under the ten-year contract. However, both nations have managed to keep the port operational under a short-term interim contract.
Despite the challenges, Ambassador Elahi expressed optimism about signing a long-term agreement for operating the port in the near future. Chabahar Port remains a critical component of the International North-South Transport Corridor, a multi-modal network connecting India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia, and Europe.
The unique procurement strategy signals India’s commitment to overcoming obstacles and leveraging Chabahar Port’s strategic potential in enhancing regional maritime transit and connectivity.