NEW DELHI: Iran and China have finalised a $400 billion strategic partnership deal, and a significant political casualty is the Chabahar to Zahedan rail project with India, which Iran has called off citing delayed finances, The Hindu reported on Tuesday.

It said Iranian Transport and Urban Development Minister Mohammad Eslami last week inaugurated the track-laying process for the 628km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan.

The development comes as China finalises a massive 25-year, $400bn strategic partnership deal with Iran, which, the paper said, could cloud India’s plans.

Officials told The Hindu that the entire project would be completed by March 2022, and that Iranian Railways would proceed without India’s assistance four years after they signed the agreement.

Tehran, Beijing finalise $400bn partnership deal

Iran would instead use approximately $400 million from the Iranian National Development Fund. It was not clear if the unnamed officials were Indian, Iranian or some other.

The Hindu cited “leaked versions” of the 18-page “Comprehensive Plan for Cooperation between Iran and China”, being finalised by officials in Tehran and Beijing. The cooperation will extend from investments in infrastructure, manufacturing and upgrading energy and transport facilities, to refurbishing ports, refineries and other installations, and will commit Iranian oil and gas supplies to China during that period.

The newspaper quoted Iranian officials as denying a report that also suggested Chabahar port would be leased to China. However, according to The Hindu, Iran proposed a tie-up between the Chinese-run port at Gwadar and Chabahar last year, and has offered interests to China in the Bandar-e-Jask port 350km away from Chabahar, as well as in the Chabahar duty free zone.

The railway project, which was being discussed between the Iranian Railways and the state-owned Indian Railways Construction Ltd (IRCON), was meant to be part of India’s commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternative trade route to Afghanistan and Central Asia.

In May 2016, during Prime Minister Narendra Modi’s visit to Tehran to sign the Chabahar agreement with Iranian President Hassan Rouhani and Afghan President Ashraf Ghani, IRCON had signed an MoU with the Iranian rail ministry.

The MoU was to construct the Chabahar-Zahedan railway as “part of transit and transportation corridor in trilateral agreement between India, Iran and Afghanistan”. IRCON had promised to provide all services and financing for the project (around $1.6bn).

However, despite several site visits by IRCON engineers, and preparations by Iranian Railways, India never began the work, ostensibly due to worries that these could attract US sanctions. The US had provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to worries they could be targeted by the US, said officials. India has already “zeroed out” its oil imports from Iran due to the sanctions.

India’s Ministry of External Affairs and IRCON declined to comment on the issue, The Hindu said.

Published in Dawn, July 15th, 2020