Economy, Business And Markets

Chabahar an Emerging Investment Hub

Chabahar an Emerging Investment Hub Chabahar an Emerging Investment Hub

Chabahar, the Iranian port city located in the southeastern Sistan and Baluchestan province, played a significant role during the 1980-88 Iran-Iraq war in providing certain commodities. The city has proved that it has great potential for investment given its relative long distance from the Strait of Hormuz.

Since the 1979 Islamic Revolution, administrations have reckoned with developing the infrastructure in the port city to turn it into an international business hub. In a recent report, Iran newspaper has looked into developments in the city.  

 Shahid Rajaee Port

Devising a comprehensive plan for construction of Shahid Rajaee Port was an effort made by the former president to develop Chabahar. The plan, however, failed to progress as scheduled, presumably for mismanagement.    

Having started in 2007, the first phase of the port development was scheduled to be completed by 2012, but with only 53 percent of physical progress, the project incurred 2.5 trillion rials ($70 million) of debt before it was handed over to the Rouhani administration, which took office in mid-2013.

The first phase of the project included construction of a wharf for berthing of large vessels and was supposed to enhance the capacity of loading/unloading of cargo to 6 million tons, which currently stands at 2 tons, the state-run newspaper said.  

However, the situation has been changing since the new administration came to office. In his third provincial trip to the province, President Hassan Rouhani visited Chabahr promising to finish key infrastructure projects.

Masoud Mohammadzadeh, an advisor to the provincial governor, outlined the outcomes of the president’s visit in an interview with the daily. “Development of Shahid Rajaee Port is planned to be completed in 5 phases,” he said, adding that upon the completion of the project, its loading/unloading capacity will increase to 85 million tons.

“Completing the first phase of the project needs 6 trillion rials ($170 million) in investment, which is expected to be financed by the National Development Fund of Iran (NDFI),” he explained.

 Railway, Gas Pipeline

The government is also working to construct a railway connecting Chabahar to Mashhad, Khorasan Razavi province.

Traffic is expected to jump fourfold on the roads ending in Sistan and Baluchestan once the first phase of the Shahid Rajaee project is become operational. Construction of the railway, which will extend 1,380 kilometers from northeast to southeast, is expected to help ease the traffic.

The railway is estimated to cost the government 20 trillion rials ($570 million) and be completed by 2019.

The government has committed itself to extend gas pipelines to Chabahar as well by the end of the next Iranian year (March 2016). This will significantly help increase the efficiency of factories in the region, Mohammadzadeh said.


 Private Sector Involvement

The government has urged the private sector to help develop 21 petrochemical complexes in the port city. The cost of the projects is estimated at $20billion, which will be provided by the NDFI in the form of loans to the private sector.

Around 40,000 jobs will be created once the first phase of the project is completed, he noted.  

Building the country’s biggest steel factory in Chabahar with an annual production capacity of three million tons is also undertaken by the private sector. Chabahar Free Trade Zone Organization, along with an Italian and Iranian company, will invest in the project.

The official anticipated that the factory would supply the steel needed by the neighboring Arab countries.

Construction of Iran’s third car manufacturing hub, scheduled to be completed by March 2016 in the port city, will contribute to national car production by 10,000 cars per year.