New Delhi, July 17: Steel Authority of India Ltd, which led a consortium of top Indian firms in bagging the $1-trillion Hajigak iron ore mine in Afghanistan, wants a soft loan from the government to go ahead with the risky investment in deep Taliban territory.
The ministry of external affairs is examining the demand.
SAIL, along with some six other Indian firms, will build an iron ore mine, a 6-million-tonne per annum steel unit and an 800 megawatt power plant at an estimated cost of $14 billion.
The ore and steel will be transported through a yet-to-be-built rail route along the Taliban-hit Zaranj-Delaram highway into Iran and on to the Indian-built Chabahar port on the Makran coast.
A SAIL spokesperson, when contacted, said, “The SAIL-led consortium approached the Indian government for support for the project and evacuation logistics and infrastructure … (as) funds for the project may not be forthcoming at competitive rates of interest …(because of the) security risk of investing and operating in Afghanistan, uncertain ore evacuation prospects and long gestation.”
SAIL officials were, however, cagey about the amount of money sought from the government.
A meeting, attended by the foreign secretary as a follow-up to the Prime Minister’s visit to Afghanistan, held last week noted that the project could be part-funded through an aid or a soft loan package, sources said.
The mega project, which would be Afghanistan’s largest foreign direct investment, and the evacuation route are both expected to be targets of Taliban fighters who see the Indian deal as a bid to consolidate New Delhi’s diplomatic leverage in war-torn mountainous Afghanistan.
Even when SAIL was bidding for the project, many independent analysts as well as SAIL insiders had voiced doubts about the security situation and the wisdom of committing such large funds in a risky project.
However, “gentle” government “nudges” to invest in a friendly Afghanistan saw the consortium, which includes SAIL, NMDC, Jindal Steel and Ispat, bidding aggressively and winning the bid.
Of late, the ministry of external affairs has been coordinating Indian economic diplomacy with chambers of commerce and major Indian business houses and has often been pro-active in seeking bilateral investment protection treaties from countries in which Indian business houses are interested in.
However, in Afghanistan’s case, Indian diplomatic interests have dictated and pleaded with Indian industry to be involved in the country, which businessmen still consider a security threat.
India has built a children’s hospital in Kabul, the Zaranj-Delaram highway and is currently building Afghanistan’s National Parliament and Salma dam and power projects.
Indian firms are also engaged in repairing power lines and highways, setting up an agricultural university and a mining school, besides restoring the historic Stor palace. It is also involved in training Afghan army officers and policemen.