China’s EXIM bank signs $1.5 bn electrification deal with Iran
The Dollar Business Bureau
China’s EXIM bank has signed a $1.5 bn worth of contract to finance the electrification of nearly 1000 km of high-speed track between Tehran and Iran’s second largest city Mashhad. This deal is a part of China’s One Belt One Road (OBOR) initiative aimed at building the infrastructure needed to connect Beijing with Western Europe, Russia, Middle East and other regions in the initiative.
Though initially the deal was reported to be more than $2 billion, both the parties have not clarified why the funding has decreased.
The Teheran-Mashhad railway electrification project is a part of the wider set of projects that Iran needs to modernise its infrastructure.
In a briefing to the media, the Iranian Deputy Transport minister, Asghar Fakhrieh-Kashan said, “Two-thirds of the contract is financed by the Chinese government with a very low-interest rate. And the remaining one-third is covered by Chinese insurer Sinosure [China Export and Credit Insurance Corporation].”
Earlier reports suggest that the earlier impediment to the project were credit guarantees which have been resolved.