Govt asks Indian firms to go slow on Chabahar projects

RCF asked to suspend shortlisting for Iranian JV partner

RISING IRAN-US TENSIONS

WITH THE sanctions squabble escalating between Iran and the US, New Delhi is instructing Indian firms to go slow on the proposed projects in Chabahar Free Trade Zone lest their financial transactions and technology imports from the rest of the world get caught in the crossfire.

The first message from the Ministry of External Affairs has been conveyed to the Department of Fertilisers to instruct state-run Rashtriya Chemicals and Fertilisers (RCF) — which had been directed last November to shortlist the Iranian joint venture partner and firm up the feasibility report for the urea project — to suspend further actions.

The MEA has told the Department of Fertilisers that it “must wait for some time before taking any further decision”. It said that it would subsequently clarify India’s stand on Iran, including the possibility of funding the project.

Once the Obama administration lifted sanctions against Iran in January 2016, India latched onto development of two berths at Chabahar port as well as a slew of gas-based projects like urea, petrochemicals, steel plants and LNG in the free trade zone.

RCF and Gujarat State Chemicals & Fertilisers started scouting for a reliable Iranian partner and had zeroed on to Tadbir Energy Development Company as the first choice while keeping communication open with Pasargad Energy Development Company “till a firm commitment is received from any one party”.

Parallely, it started working on the possible price of urea considering Iran had offered natural gas at $2.9 per million British thermal unit.

A note was to be prepared for approval of the Department of Fertilisers indicating the urea price for offtake by the joint venture.

The urea venture’s fate is now uncertain considering Tehran last Sunday imposed sanctions against 15 US companies barring them from any deals with Iranian firms and denying their past and present directors from visas in retaliation to the US sanctions last month against 25 Iranian people and firms in response to Iran’s repeated testing of ballistic missiles.

This would also result in a setback to an agreement between National Aluminum Company of India (NALCO) and Iranian Mines and Mining Industries Development & Renovation Organization for an aluminum smelter plant in Chabahar Free Trade Zone.

It would also put off other proposed projects such as Gujarat Alkalies and Chemicals Ltd’s 1,000 tonne-per-day caustic soda and chlorine unit and GAIL India’s 10-million-tonne LNG plant and gas cracker with a capacity to annually produce one million tonnes of ethylene.