India’s second attempt to select a private partner for the operation and management of marine facilities at the Chabahar port in Iran appears to be in jeopardy, as applicants prequalified to bid for the contract remain undecided about their participation in the second stage of the process — and that is despite receiving two deadline extensions.
Under a fresh tender issued last July, the three shortlisted companies had until March 13 to submit final bids; since they did not respond within that timeline, the deadline was extended until April 12, according to local government sources.
However, authorities are not so optimistic that the additional time will produce a positive outcome.
Sources also said the crux of the contract renegotiation is tied to bidder apprehension regarding an up-front fee payment in the initial period of operation — said to be $8.5 million.
Indian government agencies overseeing the project were previously considering some changes to the new tender, in order to address those concerns, but bidder wariness about such financial implications does not seem to have faded.
The Chabahar redevelopment, to which India has committed $500 million, is handled by India Ports Global Ltd. (IPGL), a special-purpose company established with equity participation from the publicly owned ports of Jawaharlal Nehru Port Trust (JNPT) and Kandla.
Chabahar: strategically located
Chabahar, which is in the Sistan-Baluchistan Province on Iran’s southeastern coast, is located about 550 nautical miles from Kandla and about 790 nautical miles from Mumbai (JNPT).
The project is strategically important for the emerging Asian economy, as Chabahar gives India direct access to Iran, bypassing Pakistan, to handle its growing energy sourcing from the international sanctions-hit nation.
India's first tender to choose a private operator for the Chabahar contract was canceled early last year, as that process ended with just one bidder. A single bidder selection does not conform to government guidelines regarding awarding of public-private-partnership projects.
Amid those delays and uncertainty, Iranian authorities, at the end of last year, opened the first phase of operations at Chabahar with total capacity increasing from 2.5 billion tonnes (2.76 billion tons) to 8.5 billion tonnes.
India has a 10-year concession for Chabahar operations, which involve a 640-meter (about 2,100 feet) container terminal with a draft of 16 meters; and a 600-meter multi-purpose facility with a draft of 14 meters. These berths are to be upgraded with new harbor equipment, including rail-mounted gantry cranes, rubber-tire gantry cranes (RTGCs), reach stackers, empty handlers, fork lifts, and trailers in the first phase. Of these, IPGL is reported to have awarded a contract to Finland-based marine equipment manufacturer Cargotec OYJ for the procurement of 14 RTGCs.
Further, depending on the progress of the initial operation, a second-phase redevelopment at Chabahar will be considered at a later stage.
If the current second tender is eventually scrapped, necessitating yet another bidding exercise, the aforementioned upgrade plans could run into longer delays and other operational complications.