The Japanese government is planning to invest in the development of a regional port and logistics hub in southeastern Iran centered on the city of Chabahar.


Prime Minister Shinzo Abe is hoping to reach a deal when he visits Tehran later this year that would�encompass Japan teaming up with India on the development of a port, logistics and industrial complex in the free trade zone located on the Gulf of Oman.


Japan�s Ambassador to Iran, Koji Haneda, led a delegation of Japanese companies to visit port, shipbuilding and petrochemicals sites in Chabahar last year. Japan was interested in assisting with transit projects, and Japanese companies were studying the potential of investing in industries such as petrochemicals and steel, Haneda said following the visit.


"Developing marine, railroad and road transport projects in Chabahar would lay the groundwork to explore the capacities in the region. Japan pledges full cooperation with the Iranian side in implementing these projects.�


The Japan International Cooperation Agency is expected to draw up plans for investments by the end of the year after further discussions on details of infrastructure requirements with Tehran and India. Loans would be provided under official development assistance programs, Japanese media reported.


Japan sees Chabahar as a potential logistics hub for Iran, Afghanistan and resource-rich Central Asia, including Turkmenistan, which is the world's fourth-largest producer of natural gas.


Japan and Iran in February signed an investment treaty including a $10 billion debt guarantee framework to alleviate financial risks for Japanese companies that decide to do business in Iran. The treaty was signed after Japan lifted key sanctions against Iran including bans on new investments in the oil and gas sector using export credits, after the United States and European Union eased nuclear-linked sanctions against Tehran the previous month.


The treaty was signed by Japan's Minister for Foreign Affairs Fumio Kishida and Iran's Minister of Economic Affairs and Finance Ali Tayebnia and is designed to protect investments by Japanese companies across various sectors of the Iranian economy. It is expected to accelerate these investments and has been welcomed by officials at Japanese corporations Mitsui, Itochu and Inpex.


In a follow-up to a previous memorandum of understanding, India and Iran recently said they had drawn up a draft of the proposed concession agreement under which New Delhi will invest in the modernization of infrastructure at two existing cargo berths at Chabahar on a 10-year lease, with a provision to renew the contract with mutual consent.


India set up a special-purpose company, India Ports Global Pvt. Ltd., to handle the port upgrades. The company is based on equity participation from two of the country�s major public ports of Jawaharlal Nehru Port Trust andKandla Port Trust.


Chabahar, which is in the Sistan-Baluchistan Province, is roughly 550 nautical miles from Kandla Port and about 790 nautical miles from Mumbai. New Delhi has a strategic interest in the Chabahar port as it is easily accessed by ports on its western coast and helps gain direct access to Iran by bypassing Pakistan, a regional rival.


In a study on the feasibility of the project, the global consulting firm McKinsey said in a report to India�s Shipping Ministry that Chabahar could plug demand and production gaps for several commodities in India such as petrochemical intermediates and urea�owing to its proximity to Indian ports.


By JOC