NEW DELHI: Iran has offered to supply natural gas at $2.95 per million British thermal unit for a urea plant that India will set up at Chabahar port on the Persian Gulf, but New Delhi wants rates to be lowered.

With the US and other western powers easing sanctions against Iran, India has been in talks with Tehran to set up a gas-based urea manufacturing plant at the Chabahar port, besides developing a gas discovery ONGC had made.

The total investment in the projects will be around Rs 1,00,000 crore, road transport, highways and shipping minister Nitin Gadkari said on Wednesday.

Asked about the development of the port, he said: "Various ministries will give their report by September 28, based on which a final decision will be taken. India is ready to invest more than Rs 1 lakh crore, but that depends on negotiations with Iran."

On talks on supply of natural gas, Gadkari further said: "Iran is offering gas to India at $2.95 per mmBtu 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 8-9 million tonnes of the nitrogenous fertilizer, 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 southeastern 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 & fertilizer 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).