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Narendra modi martrys dayKeen on deeper engagement with the sanction-free Iran, Prime Minister Narendra Modi will arrive in Iran on Sunday, on a maiden two-day visit during which a contract for developing the first phase of the strategic Chabahar port will be signed and discussion on gas field development taken forward.

Modi, who had a few weeks back, visited Shite-nation’s arch rival Saudi Arabia, is due to land in Iran on Sunday evening and will engage with the Iranian top leadership, including Supreme Leader Ayatollah Ali Khamenei, to boost bilateral trade, energy and strategic ties.

After his arrival, he will head straight to a local gurudwara where he is scheduled to address people of Indian origin.

He will hold bilateral talks with President Hassan Rouhani after a ceremonial welcome on Monday morning, which will focus on regional connectivity, infrastructure and energy as well as terrorism and extremism in the region.

Also, discussions would feature mode of clearance of the $6.4 billion Indian refiners like Essar Oil and MRPL owe to Iran in past oil dues. Ahead of the visit, refiners have cleared $1.2 billion.

There will be signing of two contracts — one by Indian Ports Global Pvt, a joint venture between the Jawaharlal Nehru Port Trust and the Kandla Port Trust, with Arya Bandar Company of Iran for developing two terminals and five multi-cargo berth in Phase-1 of the Chabahar port project.

Chabahar in South-East Iran will help skip Pakistan and open up a route to land-locked Afghanistan with which New Delhi has developed close security ties and economic interests.

From Chabahar port, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 km from the port.

The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland highway, setting up road access to four major cities — Afghanistan-Herat, Kandahar, Kabul and Mazar-e-Sharif.

Indian investment in phase-1 will be in excess of $200 million, including $150 million line of credit from Exim Bank, an agreement for which would also be signed during the visit.

Besides signing of commercial contract for Chabahar Phase-1, Modi will witness signing of a trilateral agreement on transport and transit corridor among India, Afghanistan and Iran.

Sources said talks will feature Indian state-run firms securing rights to develop the offshore Farzad-B gas field, which was discovered by ONGC Videsh.

The trilateral agreement is seen to significantly enhance prospects of India’s connectivity with Afghanistan, Central Asia and beyond such as the North-South corridor.

Modi and Iranian President are also likely to review peace and stability in the region which faces several challenges, including terrorism and violent extremism, besides cyber crime and maritime security.

India and Iran had in 2003 agreed to develop Chabahar on the Gulf of Oman outside the Strait of Hormuz, near Iran’s border with Pakistan.

But the project moved slowly because of western sanctions against Iran. The sanctions were lifted in January and since then, India has been pushing for conclusion of an agreement.

The Indian company will undertake the development of two jetties in Chabahar port for 10 years and will transfer all cargo consignments except oil products.

About a fifth of the oil consumed worldwide each day passes through the Strait, a shipping choke point that separates the Persian Gulf from the Gulf of Oman and Indian Ocean.

India plans to participate in implementation of the second phase of development of Chabahar, including building a 500-km railway line between Chabahar and Zahedan that will connect Chabahar to Central Asia.

According to the provisional deal, the Indian joint venture will refurbish a 640-metre container handling facility as well as rebuild a 600-metre multi-purpose berth at Chabahar.

The Indian side has guaranteed 30,000 twenty-foot-equivalent units (TEUs) of cargo handling in the third year of operations and aims to handle 250,000 TEUs in the 10th year.

To help fund the project, the government of India had in February cleared a proposal by the Ministry of Shipping to secure up to $150 million in credit from the Export-Import Bank of India.

Chabahar port, located in the Sistan-Baluchistan Province on Iran’s southern coast, is of great strategic utility for India. It lies outside the Persian Gulf and is easily accessed from India’s western coast.

The port project will be the first overseas venture for an Indian state-owned port. Jawaharlal Nehru Port, India’s biggest container port, holds a 60% stake in Indian Ports Global while Kandla port has the remaining 40%.