China provides unspecified funding for Shiraz-Farashband section of 446 km Shiraz-Bushehr Railroad

On March 7, 2018, an engineering, procurement, construction and finance (EPCF) contract worth CNY5 billion ($790 million) was signed between Iran's Construction and Development of Transportation Infrastructure Company (CDTIC) and China Machinery Industry Construction Corporation (Sinoconst, a subsidiary of Sinomach) for the construction of 250 km Shiraz-Farashband section (Section-1) of the 446-km Shiraz-Bushehr Railroad (China Steps Up Rail Cooperation With Iran). Deputy for Construction and Expansion of Railroads, Ports and Airports of the Construction and Development of Transportation Infrastructures Company affiliated to the Ministry of Roads and Urban Development, Jabbar-Ali Zakeri, told Financial Tribune that the insurance company guaranteeing the finance will be introduced within three months of March 2018. An HPM Group source indicates that 85% of the investment for the project will be undertaken by the Chinese side, but it is unclear if this is vendor financing by Sinoconst or funding from another unspecified Chinese institution. Some sources quote €567m to be provided by the Chinese side, which is approximately 85%. Several Iran state news (IRNA) sources confirm the presence of Chinese funding, but do not specify an amount, modality, or funding institution. Iran will be responsible for the remaining 15%. As ratified by the Iranian Parliament, this amount will be provided from the resources of the National Development Fund of Iran. Jahanpars Group is the Iranian contractor of the project. Construction does not appear to have begun nor a formal financing agreement signed. It is unclear if financing was agreed at an earlier date. According to a 1/3/13 IRNA source, Iran had in 2013 reached an agreement to finance the Shiraz-Bushehr railway. According to a 1/25/16 IRNA source, an MoU had been signed with an unspecified firm for financing the railway. One source puts the estimated cost of contract at $700 million USD.

Additional details

The Persian date on the HPM Group source is 2017, but this must be a typo, as the article references events in 2018 (cf. Bourse and Bazaar and Tehran Times sources).

Number of official sources

7

Number of total sources

16