The Government will go ahead with the investment of Rs1,00,000 crore for the development of Chabahar Port provided Iran agrees to further negotiate on the rate of natural gas sale.
Minister for Road Transport, Highways and Shipping Nitin Gadkari said that Iran has offered to supply natural gas at $2.95 per British unit for a urea plant that India will set up at Chabahar Port on the Persian Gulf, but the Centre wants Iran to lower gas sale rate.
“With the US and other western powers easing sanctions on Iran, we have been engaging in talks with Tehran to set up a gas-based urea manufacturing plant at the Chabahar Port,” Gadkari said while addressing the media on Wednesday.
“The total investment in the projects will be around Rs1,00,000 crore, which is a big amount, so we are expecting Iran to renegotiate the prices of natural gas. Several Ministries, including that of gas and petroleum, commerce and finance, will give their reports by September 28, based on which a consensus will be reached,” said Gadkari.
“We will further discuss the outcome of the meeting with the Ministry of Finance and Prime Minister’s Office before reaching a decision,” he said.
\Speaking about the deal on the supply of natural gas, Gadkari said, “Iran is offering gas to India at $2.95 per million British thermal unit to set up urea plant at the Chabahar Port in Iran. India is negotiating the gas price and has demanded it at $1.5 per mmBtu rate.”
The rate offered by Iran is less than half the rate at which India currently imports natural gas from the spot or current market.
long-term supplies from Qatar cost four-times the Iranian price. India, which imports around 8 to 9 million tonnes of the nitrogenous fertiliser, is negotiating for a price of $1.5 per mmBtu with the Persian Gulf nation in a move which if successful will see a significant decline in the country’s Rs 80,000 crore subsidy for the soil nutrient.
India has already pledged to invest about $85 million in developing the strategic port off Iran’s south eastern coast, which would provide India a sea-land access route to Afghanistan bypassing Pakistan.
“India is ready to make huge investments in Iran. If urea plant is set up, it will result in slashing of urea prices in India by 50 per cent and cut on huge subsidy on urea, which is Rs 80,000 crore,” he added.
Earlier this month, Gadkari said, “I had been to Iran and we are trying to procure gas at a very economical rate. In 2013, they had offered it at the rate of 82 cents, less than a dollar. We make urea from naphtha. We are trying to set up a urea plant in Iran.”
Ministries of Chemical & Fertiliser and Petroleum are working on the proposed 1.3 million tonnes per annum plant, which once successful will led to urea prices coming down by 50 per cent, he had said then.
The Minister had visited Tehran in May, and both the nations had inked a pact to develop the Chabahar Port. Iran’s Foreign Minister Mohammad Javad Zarif had also called on Gadkari last month.
In August, Gadkari said Iran has given “very good offers” to India to develop the integrated Chabahar port, which has a special economic zone (SEZ).