Iran has offered natural gas to India at the rate of $2.95 (about Rs 195) per million British thermal units (mBtu) for a urea manufacturing plant India wants to set up on the Chabahar port on the southeast coast of that nation, Road Transport and Highways Minister Nitin Gadkari said on Wednesday.

Gadkari added India was negotiating for a lower price of around $1.5 per mBtu and the government was looking at an investment opportunity of around Rs 1 lakh crore in the overall project that included setting up berths at the Chabahar port. India has already committee to invest $85 million in the project.

“Iran is offering gas to India at $2.95 to set up the urea plant at the Chabahar port in Iran. But we are going to negotiate the gas price. We are demanding that it would be supplied at $1.5,” Gadkari told mediapersons. The two nations had signed an initial agreement in May to set up the project.

The rate offered by Iran is less than a half of the current average spot market price of $7-8 per mBtu. Gadkari also said various ministries would give their report on the development of the port project by September 28, based on which a final decision will be taken.

India currently imports eight-nine million tonne of urea annually, a nitrogenous fertiliser used as a soil nutrient, for supplies to farmers at a subsidised rate. The government’s urea subsidy bill stood at over Rs 80,000 crore last financial year. The setting up of the 1.3-million tonne per annum urea plant near the Chabahar port would cut down domestic urea prices by a half, Gadkari said.

After chairing a meeting last month on the Chabahar port with Railway Minister Suresh Prabhu and Petroleum Minister Dharmendra Pradhan, Gadkari had said the project offered huge investment opportunities to India and a final call would be taken by Prime Minister Narendra Modi after the ministries’ reports were submitted.