Chinese Government provides EUR 46.5 million loan for construction of 5 wastewater treatment plants in Khuzestan Province

Project narrative

In December 2014, the head of Khuzestan Province Water and Wastewater Company (KPWWC), Ali Akbar Alimoradi, announced that his company had negotiated an EUR 46.5 million EPC plus Financing (EPC+F) contract with Beijing Construction Engineering Group (BCEG) for the construction of 5 wastewater treatment plants in Khuzestan Province. The Chinese Government subsequently issued a loan to the EPC contractor (BCEG) to finance approximately 85% of the cost of the EPC (commercial) contract. Under most EPC+F contractual arrangements in Iran, a loan is extended to the EPC contractor but with a sovereign guarantee from the Iranian Government. The purpose of this project was to construct wastewater treatment plants in four cities (Abadan, Khorramshahr, Shadegan, Mahshahr) and Imam Khomeini port. Upon completion, these wastewater treatment plants would have a total capacity of 230,000 cubic meters/day and cover 1.1 million people per year. In February 2017, Khuzestan Province Water and Wastewater Company announced that the 5 plants would be finished sometime in 2018. However, as of January 2019, the project had only achieved an 80% completion rate and it was expected to reach completion in early 2020.