China to finance 88% of Tehran-Mashhad railway electrification costing up to $2bn

By bne IntelliNews August 7, 2017

China is to finance as much as 88% of the $1.5-2bn project for the electrification of a 1,000km high-speed rail route connecting the Iranian capital of Tehran and second city Mashhad, Iran Labour News Agency (ILNA) reported on August 7.

A $1.5bn credit in initial financing will be advanced by the EXIM Bank of China to be relayed to contractors working on the recently agreed investment by Iran’s Bank of Industry, Mining and Trade.

“Two-thirds of the contract's [Chinese financing] will be 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],” Iranian Deputy Transport Minister Asghar Fakhrieh-Kashan told Iranian media.

The main sticking point in relation to the contract was credit guarantees, but that issue had lately been resolved, he added.

The deal comes under the umbrella of China’s massive One Belt One Road (OBOR) initiative to build trade infrastructure and associated trade and investment ties between Beijing and Western Europe, Russia, the Middle East and other regions.

The Tehran-Mashhad railway electrification deal is also one aspect of a wider set of projects being developed by Iran to upgrade its general infrastructure.

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