Iran drops India from Chabahar rail project, cites funding delay:News Report | Chronicleplanet.com

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Iran drops India from Chabahar rail project, cites funding delay:News Report

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Four years after India and Iran signed an agreement to construct a rail line from Chabahar port to Zahedan, the Iranian government has decided to proceed with the construction on its own, citing delays from the Indian side in funding and starting the project.

This development comes as China finalizes a massive 25-year, $400 billion strategic partnership deal with Iran, which could cloud India’s plans.Recently, Iran inaugurated the track-laying process for the 628 km Chabahar-Zahedan line, which will also be extended to Zaranj across the border in Afghanistan. The entire proposed project is expected to be completed by March 2022.
For the funding part, it has been decided that Iranian Railways will proceed without India’s assistance, instead, it will be using approximately $400 million from the Iranian National Development Fund.

Last week, Iranian Transport and Urban Development Minister Mohammad Eslami inaugurated the track-laying process for the 628 km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan. Officials told The Hindu that the entire project would be completed by March 2022, and that Iranian Railways will proceed without India’s assistance, using approximately $400 million from the Iranian National Development Fund.

Iran’s move to drop the partnership with India comes as it finalises a sweeping 25-year economic and security partnership with China worth $400 billion. The partnership would vastly expand Chinese presence in banking, telecommunications, ports, railways and dozens of other projects.

In exchange, China would receive a regular — and, according to an Iranian official and an oil trader, heavily discounted — supply of Iranian oil over the next 25 years. An 18-page document detailing the proposed agreement also describes deepening military cooperation, potentially giving China a foothold in the region.

The agreement could hurt India’s prospects in the region. The railway line was finalised in May 2016 during Prime Minister Narendra Modi’s visit to Tehran to sign the Chabahar agreement with Iranian President Rouhani and Afghanistan President Ghani.

It was part of India’s commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia. Government-owned Indian Railways Construction Ltd (IRCON) had promised to provide all services, superstructure work and financing for the project (around $1.6 billion).

However, with US imposing sanctions on Iran, India never started the work on the railway line despite several site visits by IRCON engineers.

While the US had given a sanctions waiver for the Chabahar port and the rail line, India found it difficult to find equipment suppliers due to worries they could be penalised by the US, the Hindu reported. The Ministry of External Affairs and IRCON have declined to comment on the issue.

The Iran-China deal impinges on India’s “strategic ties” with Iran and the use of Chabahar port.
Bandar-e-Jask port lies to the west of Chabahar & right before Straits of Hormuz. China would thus extends its control along the Pakistan-Iran coast.