Months after starting Chabahar rail project without India, Iran seeks equipment

2 weeks ago 12

In an interview to 'The Hindu', Iranian diplomat Masoud Rezvanian says Tehran now hopes that New Delhi will help facilitate equipment for the Chabahar-Zahedan railway line

India is not a part of the Chabahar-Zahedan railway at present, but as Iran begins the second phase of the 628-km project, Tehran hopes New Delhi will help it procure equipment to run the rail line from the Chabahar port to the Afghan border.

According to a senior Iranian diplomat, Iran’s Port and Maritime Organisation (PMO) recently conveyed to India a request for cranes, tracks, switches and signalling equipment, as well as locomotives that it has had difficulty in procuring them directly due to the U.S.-imposed sanctions. Iran has also asked to activate a $150 million credit line that had been offered by India during Iranian President Rouhani’s visit to Delhi in 2018 to pay for the purchases.

“We are still hopeful that the pledge for the line of credit India made in 2018 [will] pave the way for future cooperation,” Iran’s Deputy Chief of Mission Masoud Rezvanian told The Hindu in an interview, explaining that the 2016 MoU signed with the Indian Railway Construction company (IRCON) was no longer relevant as there had been no progress in talks, and Iranian construction companies have now taken over the project.

According to the Ministry of External Affairs (MEA), IRCON completed the site inspection and feasibility report, and had been waiting for the Iranian side to appoint a nodal authority.

Official sources said the real sticking point was that Iranian construction company Khatam Al Anbyar is under U.S. sanctions for its links to the Iranian Revolutionary Guards Committee (IRGC) and although the Chabahar project has secured a special waiver from the US, the government is hesitant to deal with the IRGC entity.

On November 4, Iran’s Urban Development Minister Mohammad Eslami inaugurated the track-laying ceremony for the second of the three phase construction. Sixty per cent of the track-laying and about half of the entire project, including infrastructure and superstructure are now complete, and officials say they are on track to complete the whole line by June 2021, which will connect the Chabahar port to the Afghan border, but through the existing rail system, to Turkmenistan and Central Asia as well. The first phase was inaugurated in July last, leading to a controversy over the fact that India had been dropped from the project.

“We think that we should look at the future instead of digging into the past, where there have been some sources of bitterness,” said Mr. Rezvanian, clarifying that Indian companies played “no role at present” in the railway project. In contrast, the Chabahar port Shahid Beheshti Terminal, operated jointly by India and Iran, had been running smoothly, and had processed more than 12 lakh tonnes of bulk cargo and 8200 containers, according to the MEA.

Gas field development

Delays due to sanctions have also taken a toll on the Indian interest in developing the Farzad-B gas field, where ONGC Videsh made a discovery in 2008, Mr. Rezvanian explained, when asked about reports that Iran would now develop it through domestic companies.

“Iran has frequently said that we cannot wait until sanctions are lifted to develop Farzad B...[] That’s why Iran recently said that we will hand over Farzad-B to an Iranian company, and we will complete exploration and development on our own,” he said.

The issues over India-Iran cooperation are believed to have been taken up during quick stops by External Affairs Minister S. Jaishankar and Defence Minister Rajnath Singh, in Tehran in September in transit to and from Moscow respectively, where they attended the SCO ministerial meet.

U.S. poll results

The U.S. election results projecting Mr. Biden as the next President are being watched in both India and Iran for the possibility that sanctions on Iran might ease, allowing India to increase its engagement with its traditional partner who used to be a major supplier of oil before the Trump administration forced India to “zero out” imports. New Delhi is also watching negotiations on a 25-year strategic cooperation agreement between China and Iran believed to be worth $400 billion, which could fund other parts of the Chabahar development, including a free trade zone along the Makran coast, and oil infrastructure projects.

According to Mr. Rezvanian, however, the “umbrella agreement” would not impinge on India’s interests in any way.

Full interview:

Where do you see India-Iran relations at present, especially given the continuing pressure of U.S. sanctions?

If we categorise ties into trade and economic relations as well as political relations, we can acknowledge that when it comes to politics, there has been a great understanding. We have had exchanges of delegations at the highest level, and we have had good relations whether it was at the time of the Congress party ruling India or the BJP. But when it comes to economic and trade relations, they have been subject to some limits and some restrictions, which, to our understanding, have been unnecessarily imposed by third parties. These powers [USA] have put pressure directly or indirectly on relations, although that has not been the will of both governments.

What we expect is that the political will of the two governments should pave the way for private and public companies to avoid these difficulties. I remember when the previous round of sanctions was imposed by U.S. unilaterally and very unjustly against Iran in 2010, we managed to design for example, the rupee-rial mechanism, which could help and facilitate and continue to trade between the two countries. Even at this time, there is some political will with the government to continue that positive approach. Relations with third parties should never determine the quality of relations between Iran and India, and we have never been against what kind of friendship India follows with others, and we hope India also allows us to pursue other friendships in our interest.

On that note, what is the latest on the Iran-China Cooperation programme, believed to be a $400-billion 25-year deal? There have been misgivings in India about some of the infrastructure projects in the deal affecting India’s investment in Chabahar port...

We are still finalising the agreement, and like any other important agreement that takes some time, even years. This is an umbrella agreement, so media reports on figures and specifics are really untrue at present. When it comes to Chabahar, one must understand exactly what is being discussed with whom. We have a good collaboration with India in a terminal of Chabahar port, operated by a joint venture between Iran and India. They shown their efficiency in increasing the traffic and transit of goods between the two countries and via Chabahar to neighbouring countries, mainly for Afghanistan. In addition to the terminal, we have a free trade zone, which we would like to use as a leverage for developing the Makran coast with the Oman sea. We have offered opportunities there to India, and we have offered the same opportunities to other countries, Japan, CIS countries, China and to European countries.

There has also been some confusion over the Chabahar-Zahedan railway line recently. While the MEA has said India remains engaged in the project, Iran appears to have gone ahead with constructing the line without Indian companies. Could you clarify what is India’s role?

Chabahar port is very important to us, but a port without inland connectivity support would be useless. At this stage, there is a good road which connects Chabahar to Zahedan and to other parts of the country. But if the level of traffic and transit of goods increases, then the capacity of that road is not sufficient. Discussions on this rail line began between India and Iran in 2010, and we offered Indian companies participation in the construction, technical aspects and operation of the project. But for a number of reasons, the economy, the other problems [sanctions] it took very long to conclude an agreement.

It maybe better not to go to the history of, you know, such exchanges between the two sides. We think that we should look at the future instead of digging into the past, where there have been some sources of bitterness. We know what is happening in the neighbourhood [Afghanistan and Pakistan]. India is looking more and more to the importance of Chabahar, and Iran would like to expedite connectivity projects in the South eastern region.

Given this urgency, we decided to utilise our own financial resources and engineering capacity to complete the [railway line]. So far 60% of the infrastructure of the railway line has been constructed, which means about 48% of the total project, and [pointing to a map], if you see two of the three parts of the Chabahar-Zahedan line have now been started, including the inauguration of one section a few days ago. The whole project of 628 km is expected to be finalised by June 2021. This will then connect through the existing Iranian railway network to Turkmenistan, and also to Afghanistan at another point from Khaf to Herat, which is being completed on the Afghan side by the Kazakhstan government.

India could use both the line to Zahedan, as well as these other connections for its goods, and we still hope India would like to help us with this project. Recently Iran’s Port and Maritime Organisation has sent a request to relevant authorities in India through our Embassy, with a list of equipment including rail-lines, switches, signalling systems and also locomotives that we hope India could help us procure. When President Rouhani visited India in February 2018, India had signed an agreement for $150-million credit line, and we also hope this could be used to facilitate the supplies.

But to clarify... at present, India and Indian companies have no role in the railway line between Chabahar and Zahedan?

No, no role at present.

Because I'm sure you have seen that the Ministry of External Affairs denied that India is out of the project....

Well you know, to reach an agreement, some steps need to be taken taken by both sides. Unofficially, there have been many dialogues, but an agreement was never completed.

What is the status of the MoU with Indian Railway Construction Company IRCON that was signed in 2016, today?

Nothing at present, because it wasn’t pursued due to various reasons. However, we are still hopeful that the pledge for the line of credit India made in 2018 might now pave the way for future cooperation. Iran is very hopeful that India will respond to this request in an expedited manner. Even now, we express our wish to welcome the Indian government and Indian companies to the project, and would be happy to facilitate any site surveys.

Recent reports said India was no longer a part of the development of Farzad-B gas fields. What is the latest on this, as well as on setting up a branch of Iranian bank Pasargad in India to facilitate transactions?

On Farzad-B, it is well known that OVL-ONGC Videsh had begun explorations there in 2008, but due to sanctions there were some delays in going ahead. Now, you may know that this gas basin is shared between Iran and Saudi Arabia. Iran has frequently said we cannot wait until sanctions are lifted to develop Farzad B, as the other side is able to develop its side, and Iran will lose its resources if it is delayed further. That’s why Iran recently said we will hand over Farzad-B to an Iranian company, and we will complete exploration and development on our own. On the Pasargad Bank branch, we are pleased to have made some progress, and completed logistics, including a location in Mumbai, and staffing. However, we are waiting for final clearance from the Reserve Bank of India so it can begin operations.

Both the External Affairs Minister and Defence Minister visited Tehran in the recent past for talks. Were any specific agreements under discussion, and do we expect any high level visits from Iran in the near future?

Both the Ministers were travelling to Moscow to participate in the SCO summit, and we saw their visits to Tehran for refuelling their airplanes as an opportunity for talks. Mostly, the discussions were over the regional situation and the situation in the neighbourhood particularly in Afghanistan.

In the past, some Iranian officials have suggested they would be prepared to facilitate India’s engagement with the Taliban...has the Indian government requested this?

So far, we have not witnessed any such request, I think. However, we did note India’s presence at the inauguration of the Doha talks this year, and previously when an unofficial delegation took part in some talks in Moscow where Taliban representatives were also present.

No winner has been declared yet in the U.S. presidential elections, but do you think a change in leadership there will relax some of the sanctions against Iran. In particular, do you think India may be able to restart oil imports from Iran?

Well, this is essentially a commercial decision as well as a political one. We believe that Iran’s proximity to India makes the best sense for the Indian market. Because of our close relations we used to sell our crude oil to India on credit, so India could process and even resell it, and pay us in time. In addition, as we used the rupee-rial mechanism, the money we received from India was used to purchase goods from India, and so it benefited the Indian economy. It is premature to say what will happen next, but I do think that for Indian companies, in spite of the increase in purchase of oil and gas from the U.S. market, restarting oil from Iran is still something they think about.

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